Spain’s government, opposition agree change to pensions

Spain’s ruling Socialists and the conservative opposition have struck a deal on how state pensions are calculated, one element in a major reform scheme, party officials said Thursday.

The government has promised a radical change to pensions in early 2011 to trim the public deficit and soothe market fears that Spain could be trapped in a European debt quagmire that has swamped Greece and Ireland.

Most importantly, Madrid wants to raise the retirement age by two years to 67, a plan that is fiercely opposed by the biggest unions, UGT and CCOO, which have called for street protests Saturday.

Under a deal struck in preliminary parliamentary talks Wednesday, the Socialists and the opposition Popular Party agreed to extend the number of years of earnings that are used to calculate a pension.

The state now uses a worker’s last 15 years of earnings as a base for calculating the final pension.

But with many out of work, the parties agreed this period should be extended, Popular Party negotiator Tomas Burgos told public radio RNE.

“The agreement does not mean a reduction in pensions but an improvement for those who have had the problem of losing their job in the past few years,” he said.

Several newspaper reports said the the future base for calculating pensions would likely be the last 20-25 years of a person’s earnings but an exact time frame had not yet been decided.

The Socialist Party negotiator, Isabel Lopez i Chamosa, stressed that the deal was just an “advance in the negotiations” towards a pension reform.

She said the parties had still to agree on major elements including the retirement age and how to handle complementary pension systems.

Prime Minister Jose Luis Rodriguez Zapatero’s government has said the cabinet will approve the pension reforms January 28.