The Spanish public pension system is more in question than ever. We are the country with the second highest life expectancy in the world, only behind Japan, and demographic projections announce an increasingly marked aging of the Spanish population in the next 30 years.
Currently in Spain there are 2.23 workers for each pensioner, which guarantees a certain stability of the system. However, by 2052, the INE forecasts that the population group over 64 years of age will have increased by more than 7 million people, while the group between 16 and 64 years of age will have lost almost 10 million.
This situation will cause an abrupt decrease in the worker / pensioner ratio, which will probably fall below 2. A circumstance that, for many experts, makes the Social Security pay-as-you-go system unsustainable, and which greatly worries current workers. active, many of which already are looking for ways to complement their public pensions.
Public pensions will be lower and lower and we will retire later
Currently, the average pension in Spain amounts to just over € 1,000, according to Social Security pension statistics. And this taking into account that the replacement rate, the variable that measures the relationship between the last salary received by the worker and his public pension, It is one of the most generous in Europe.
The report Aging Report 2018 places the replacement rate in Spain at 78.7%, almost double the European average, which is 42.5%. However, the successive reforms that have been implemented will lower this figure to bring it in line with the rest of the EU countries.
To all this we must add the increase in the retirement age and the contribution period, which is increasing progressively until 2027 reaches 67 years of age and a minimum contribution period of 37 years. More likely, future reforms will significantly reduce the amount of pensions, while forcing workers to remain active for much longer.
The importance of saving to complement retirement
The prospects are not rosy, and workers will be forced to supplement their public pension with private savings. However, a recent study by Raisin on financial preparation shows that three out of four Spaniards admit that they cannot prepare adequately for retirement.
In fact, more than half of the respondents (58%) Saving That Saving Makes No Sense Due To Low Interest Rates that currently govern the markets, a circumstance that has a very significant impact on their future prospects. According to data from the Bank of Spain, the average interest offered by time deposits in February 2020 was 0.05%.
It also contributes to all this a poor financial education of the Spanish population, which continues to entrust its savings to the traditional deposits offered by its trusted banks, without stopping to think about whether there are other more interesting alternatives.
Given these perspectives, private savings will become an increasingly important need among Spanish workers. We do not know what will happen in 50 years, but what we do know is that we will live longer and in better health than our ancestors. That is why it is so important that, when defining our future, we also remember plan our retirement.