SPAIN - Continued delays to pension reform would raise the scale of the measures eventually needed to ensure long-run fiscal sustainability, the International Monetary Fund has warned.
The IMF said such measures would need to include an extension of the base period used to compute pensions, and steps to make tax treatment of private pension plans stable and predictable.
Directors welcomed the recent tripartite agreement on pension reform, which included incentives to extend the working life and marginally extended the effective minimum contribution period from 12.8 to 15 years.
This reform also extended the coverage of widowers’ pensions and increased the pensions of those retired early because of dismissal.
But it left the base period to compute pensions untouched, a factor which led the IMF to conclude that while the reforms represented a move in the right direction, further action was needed.
The onset of the rising costs of ageing was larger than elsewhere, even taking into account Spain’s immigration phenomenon, the IMF warned, adding that this problem was now only a decade or so away.
By Lisa Haines
This week's edition of Professional Pensions is out now
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