Juan Francisco Martín Seco
Republic of ideas
Republic of ideas
Public pensions have been always threatened, but not by economic constraints, but by the interests of the financial system and economic forces. The offensive has been constant. Already in the eighties and nineties the public system underwent several reforms, all aimed at worsening conditions for beneficiaries, but has been in this century, with the advent of the euro and mainly with the economic crisis, when the attack has been ironclad and has affected the very foundations of the system.
Public pensions have been at the center of all austerity policies and the various adjustments imposed on member states by Brussels. In Spain the assault began that fateful night in May 2010 in which, perversely, Zapatero and Economy Minister surrendered without resistance to pressure from Germany. Along the block given to the remuneration of civil servants, pensions are frozen. The offensive continued with the reforms carried out later, in 2011, the same Zapatero, which already was emerging sustainability factor; but it was consummated and perfected with that undertaken by Rajoy in 2013, with lethal effects thus eliminating the annual update of the pension for the CPI increase, for the realization of the sustainability factor,
All of these modifications in the system have the same origin, the coercion of one or another form of Brussels. You can hardly speak thus having overcome the crisis, if they are not restitute to pensioners earlier rights. can not surprising, therefore, the degree of virulence are showing the multiple manifestations of boarders. It was evident that when inflation retornase at normal rates, this would be one of the most negative effects of the reform, the gradual depreciation of the amount in real terms of benefits.
During this time, the various political forces have been reinventing the wheel without seriously dealing with this problem. Only when pensioners have taken to the street is when they intervened, but with a single purpose: to fish in troubled waters votes. With the many errors, the Toledo Pact had two positive aspects. The first, the commitment of all parties not to use pensions as an electoral weapon; the second, to guarantee retirees their benefits would maintain purchasing power. Both factors seem to be lost in the moment.
On the issue of pensions, which affects both current retirees and the future- they are given two points which, although connected, should be separated. One is the annual update of pensions referred to in the Constitution; the other is the solvency of the system in the future.
Update or pensions CPI is a false problem that only appears as such when surrounded by fallacies. At the time that was in effect updating benefits CPI, if inflation had risen more than expected and had to pay the corresponding difference to retirees, almost all the media assumed the lie that represented a additional cost to the exchequer, which is not true since inflation also public sector revenues equal or greater amount increases.
Formerly many families of modest economy when they would have a son claimed, with some irony, that sort of maxim that children brought bread under his arm, which in most cases was not true. But something similar, and on this occasion that rightly can preach the impact of inflation on the state budget. Inflation comes with funding under the arm, because while it may increase state expenditures also automatically increases all income.
Treasury says that this year's tax revenue is booming. The reason must certainly seek the economy in real terms is growing by 3%, but the price increase, which automatically increases state revenues. There is, therefore, no reason to refuse the update. Reject is just take advantage inflation to a transfer of resources from the group of pensioners to other applications or budget deficit reduction.
The excuse used by the government, and somehow also citizens, lack of budgetary resources is not acceptable. It is a matter of choice, of political decision. Why it has to be cut in pensions and not on other items of expenditure? Why not in defense, on the financing of the Autonomous Communities in the expenses of the municipalities or public investment? Why not dispense with the commitments made to citizens tax cuts, wage supplements to establish that basically represent a subsidy to employers or reducing social security contributions? Why deprive pensioners than their share to devote to other perhaps more questionable and inappropriate items?
The update can not be considered a robbery, a real spoliation. Unjustifiably it constitutes a specific tax on pensioners. Tax is cumulative, resulting in the medium term devastating effects on pensions. Imagine an average annual inflation of 2%. The first year the update is not equivalent to a tax of 2%, the second year would be 4% (2.02 x 2.02), 6% the third year. And so on. Ten year, the cumulative tax would be equivalent to 22%. The twentieth year, the tax would be 48%. That is, for a person to carry 20 years of retirement, the pension no annual update would be half of what it would be if it had updated every year.
The protest of pensioners is forcing all parties to rule. The government is being forced to give an alternative, an alternative that is not easy to understand. This is some pensioners grant tax relief. All governments are tempted, against the most elementary logic of Public Finance, to grant social benefits as a reduction of income, rather than through the relevant chapter of expenditure. In addition to the many flaws that preaches tax theory of tax expenditures, it should be noted that the purpose of the tax administration is to collect taxes and prosecute fraud, not to manage pensions. For this purpose, it is now the Ministry of Labor.
Even if it is not well known in what will consist the precise scope of the measure, we can say that there is only one explanation to flee the annual update of pensions by the IPC and set in place a social benefit to pensioners. The reason is to be found that the cost of this help will be much lower than the upgrade, probably because the number of beneficiaries will be greatly reduced, but also and mainly because the benefit will not be cumulative and in the case of the update, yes.
The Government's argument is using figures can be misleading. He states that the average pension has grown in the last year 14%. The data may be true, but the reason is not, as he says, because that has been the increase in individual pensions, but because the benefits of retirees leaving the system is substantially lower than that of retirees who join , which is rather revealing how the amount of pensions deteriorates over time, and that so far have been updated by the IPC.
The Ministry of Labor, Department have emerged the toughest and reactionary reforms (do not know why pensioners were to manifest to the Ministry of Finance instead of going to Labor, which is prepared by the law), it has leaked a picture that has picked up a newspaper in Madrid. Aims to show how it will evolve in the future the percentage of pension expenditure on GDP, CPI benefits would update. Distinguishes various scenarios according to the actual increase in the economy, but curiously the hypothesis that chooses for inflation is always the same, 1.8%. The reason is obvious, the data are identical whatever inflation; even if it were zero and therefore there should be no updating of benefits. I do not know if the data is good or bad. Only the ministry has the guts and know the assumptions on which were drawn up, but pictures like this one are concocting since the eighties without ever successful in such long-term forecasts. In any case, what is certain is that the evolution of the percentage of spending on GDP does not depend on inflation and that pensions are updated. Another thing is that you want to take advantage inflation to reduce benefits to retirees and get so total expenditure is reduced. In this case it is undeniable that the higher the CPI, the higher the cut to be given in real terms and lower pensions, the total expenditure, which does not make much sense. but pictures like this one are concocting since the eighties without ever successful in such long-term forecasts. In any case, what is certain is that the evolution of the percentage of spending on GDP does not depend on inflation and that pensions are updated. Another thing is that you want to take advantage inflation to reduce benefits to retirees and get so total expenditure is reduced. In this case it is undeniable that the higher the CPI, the higher the cut to be given in real terms and lower pensions, the total expenditure, which does not make much sense. but pictures like this one are concocting since the eighties without ever successful in such long-term forecasts. In any case, what is certain is that the evolution of the percentage of spending on GDP does not depend on inflation and that pensions are updated. Another thing is that you want to take advantage inflation to reduce benefits to retirees and get so total expenditure is reduced. In this case it is undeniable that the higher the CPI, the higher the cut to be given in real terms and lower pensions, the total expenditure, which does not make much sense. Another thing is that you want to take advantage inflation to reduce benefits to retirees and get so total expenditure is reduced. In this case it is undeniable that the higher the CPI, the higher the cut to be given in real terms and lower pensions, the total expenditure, which does not make much sense. Another thing is that you want to take advantage inflation to reduce benefits to retirees and get so total expenditure is reduced. In this case it is undeniable that the higher the CPI, the higher the cut to be given in real terms and lower pensions, the total expenditure, which does not make much sense.
Before the issue of revaluation, the leader of Citizens gets transcendent and says that's not the problem, but must go to the issue of long-term sustainability, and talks to create employment, raise wages, to fix the problem of birth, conciliation. That's all very well, but as they get, allow yourself to current retirees do not lose at least purchasing power. It is the false parable of the rod and the fish, which both employ those opposed to social benefits. Teach him to fish can be very good, but as you learn again, let the fish that need it, because while you learn or not it has been starve. Something similar happens with pensions. While employment is created, the birth rate is corrected or wages go up, keep the purchasing power of pensioners.
The viability of the public pension system can not be encrypted on the mere fact gradually reduce benefits, which is what has been making reform after reform. That's not it viable, but destroy it step by step. Moreover, just solve the problem either. The remedy can not come neither birth nor reconciliation, even employment and wages themselves. To show and ensure the viability of the system must be drawn narrowly pensions of Social Security and contributions and to place all the obligations of the state and a social state which is established by our Constitution. But this aspect deserves an entire article, so we left it for next week.
Source:http://www.republica.com/contrapunto/2018/03/08/la-rebelion-los-pensionistas/ #
Public pensions have been at the center of all austerity policies and the various adjustments imposed on member states by Brussels. In Spain the assault began that fateful night in May 2010 in which, perversely, Zapatero and Economy Minister surrendered without resistance to pressure from Germany. Along the block given to the remuneration of civil servants, pensions are frozen. The offensive continued with the reforms carried out later, in 2011, the same Zapatero, which already was emerging sustainability factor; but it was consummated and perfected with that undertaken by Rajoy in 2013, with lethal effects thus eliminating the annual update of the pension for the CPI increase, for the realization of the sustainability factor,
All of these modifications in the system have the same origin, the coercion of one or another form of Brussels. You can hardly speak thus having overcome the crisis, if they are not restitute to pensioners earlier rights. can not surprising, therefore, the degree of virulence are showing the multiple manifestations of boarders. It was evident that when inflation retornase at normal rates, this would be one of the most negative effects of the reform, the gradual depreciation of the amount in real terms of benefits.
During this time, the various political forces have been reinventing the wheel without seriously dealing with this problem. Only when pensioners have taken to the street is when they intervened, but with a single purpose: to fish in troubled waters votes. With the many errors, the Toledo Pact had two positive aspects. The first, the commitment of all parties not to use pensions as an electoral weapon; the second, to guarantee retirees their benefits would maintain purchasing power. Both factors seem to be lost in the moment.
On the issue of pensions, which affects both current retirees and the future- they are given two points which, although connected, should be separated. One is the annual update of pensions referred to in the Constitution; the other is the solvency of the system in the future.
Update or pensions CPI is a false problem that only appears as such when surrounded by fallacies. At the time that was in effect updating benefits CPI, if inflation had risen more than expected and had to pay the corresponding difference to retirees, almost all the media assumed the lie that represented a additional cost to the exchequer, which is not true since inflation also public sector revenues equal or greater amount increases.
Formerly many families of modest economy when they would have a son claimed, with some irony, that sort of maxim that children brought bread under his arm, which in most cases was not true. But something similar, and on this occasion that rightly can preach the impact of inflation on the state budget. Inflation comes with funding under the arm, because while it may increase state expenditures also automatically increases all income.
Treasury says that this year's tax revenue is booming. The reason must certainly seek the economy in real terms is growing by 3%, but the price increase, which automatically increases state revenues. There is, therefore, no reason to refuse the update. Reject is just take advantage inflation to a transfer of resources from the group of pensioners to other applications or budget deficit reduction.
The excuse used by the government, and somehow also citizens, lack of budgetary resources is not acceptable. It is a matter of choice, of political decision. Why it has to be cut in pensions and not on other items of expenditure? Why not in defense, on the financing of the Autonomous Communities in the expenses of the municipalities or public investment? Why not dispense with the commitments made to citizens tax cuts, wage supplements to establish that basically represent a subsidy to employers or reducing social security contributions? Why deprive pensioners than their share to devote to other perhaps more questionable and inappropriate items?
The update can not be considered a robbery, a real spoliation. Unjustifiably it constitutes a specific tax on pensioners. Tax is cumulative, resulting in the medium term devastating effects on pensions. Imagine an average annual inflation of 2%. The first year the update is not equivalent to a tax of 2%, the second year would be 4% (2.02 x 2.02), 6% the third year. And so on. Ten year, the cumulative tax would be equivalent to 22%. The twentieth year, the tax would be 48%. That is, for a person to carry 20 years of retirement, the pension no annual update would be half of what it would be if it had updated every year.
The protest of pensioners is forcing all parties to rule. The government is being forced to give an alternative, an alternative that is not easy to understand. This is some pensioners grant tax relief. All governments are tempted, against the most elementary logic of Public Finance, to grant social benefits as a reduction of income, rather than through the relevant chapter of expenditure. In addition to the many flaws that preaches tax theory of tax expenditures, it should be noted that the purpose of the tax administration is to collect taxes and prosecute fraud, not to manage pensions. For this purpose, it is now the Ministry of Labor.
Even if it is not well known in what will consist the precise scope of the measure, we can say that there is only one explanation to flee the annual update of pensions by the IPC and set in place a social benefit to pensioners. The reason is to be found that the cost of this help will be much lower than the upgrade, probably because the number of beneficiaries will be greatly reduced, but also and mainly because the benefit will not be cumulative and in the case of the update, yes.
The Government's argument is using figures can be misleading. He states that the average pension has grown in the last year 14%. The data may be true, but the reason is not, as he says, because that has been the increase in individual pensions, but because the benefits of retirees leaving the system is substantially lower than that of retirees who join , which is rather revealing how the amount of pensions deteriorates over time, and that so far have been updated by the IPC.
The Ministry of Labor, Department have emerged the toughest and reactionary reforms (do not know why pensioners were to manifest to the Ministry of Finance instead of going to Labor, which is prepared by the law), it has leaked a picture that has picked up a newspaper in Madrid. Aims to show how it will evolve in the future the percentage of pension expenditure on GDP, CPI benefits would update. Distinguishes various scenarios according to the actual increase in the economy, but curiously the hypothesis that chooses for inflation is always the same, 1.8%. The reason is obvious, the data are identical whatever inflation; even if it were zero and therefore there should be no updating of benefits. I do not know if the data is good or bad. Only the ministry has the guts and know the assumptions on which were drawn up, but pictures like this one are concocting since the eighties without ever successful in such long-term forecasts. In any case, what is certain is that the evolution of the percentage of spending on GDP does not depend on inflation and that pensions are updated. Another thing is that you want to take advantage inflation to reduce benefits to retirees and get so total expenditure is reduced. In this case it is undeniable that the higher the CPI, the higher the cut to be given in real terms and lower pensions, the total expenditure, which does not make much sense. but pictures like this one are concocting since the eighties without ever successful in such long-term forecasts. In any case, what is certain is that the evolution of the percentage of spending on GDP does not depend on inflation and that pensions are updated. Another thing is that you want to take advantage inflation to reduce benefits to retirees and get so total expenditure is reduced. In this case it is undeniable that the higher the CPI, the higher the cut to be given in real terms and lower pensions, the total expenditure, which does not make much sense. but pictures like this one are concocting since the eighties without ever successful in such long-term forecasts. In any case, what is certain is that the evolution of the percentage of spending on GDP does not depend on inflation and that pensions are updated. Another thing is that you want to take advantage inflation to reduce benefits to retirees and get so total expenditure is reduced. In this case it is undeniable that the higher the CPI, the higher the cut to be given in real terms and lower pensions, the total expenditure, which does not make much sense. Another thing is that you want to take advantage inflation to reduce benefits to retirees and get so total expenditure is reduced. In this case it is undeniable that the higher the CPI, the higher the cut to be given in real terms and lower pensions, the total expenditure, which does not make much sense. Another thing is that you want to take advantage inflation to reduce benefits to retirees and get so total expenditure is reduced. In this case it is undeniable that the higher the CPI, the higher the cut to be given in real terms and lower pensions, the total expenditure, which does not make much sense.
Before the issue of revaluation, the leader of Citizens gets transcendent and says that's not the problem, but must go to the issue of long-term sustainability, and talks to create employment, raise wages, to fix the problem of birth, conciliation. That's all very well, but as they get, allow yourself to current retirees do not lose at least purchasing power. It is the false parable of the rod and the fish, which both employ those opposed to social benefits. Teach him to fish can be very good, but as you learn again, let the fish that need it, because while you learn or not it has been starve. Something similar happens with pensions. While employment is created, the birth rate is corrected or wages go up, keep the purchasing power of pensioners.
The viability of the public pension system can not be encrypted on the mere fact gradually reduce benefits, which is what has been making reform after reform. That's not it viable, but destroy it step by step. Moreover, just solve the problem either. The remedy can not come neither birth nor reconciliation, even employment and wages themselves. To show and ensure the viability of the system must be drawn narrowly pensions of Social Security and contributions and to place all the obligations of the state and a social state which is established by our Constitution. But this aspect deserves an entire article, so we left it for next week.
Source:http://www.republica.com/contrapunto/2018/03/08/la-rebelion-los-pensionistas/ #
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