Spain to push forward on pension reform

20th December 2010, Comments 0 comments

The Spanish government intends to raise the retirement age and change the calculation method of pensions as part of an overhaul aimed at reducing the public deficit, Labour Minister Valeriano Gomez said Monday.

He confirmed during an interview with news radio Cadena Ser that his socialist government wants to raise the retirement age by two years to 67, a plan that is fiercely opposed by the country's unions.

"The best way to extend the length of working life is to push back the age of retirement to 67. Those who wish to retire at 65 can do so, but in this case the must accept a reduction in their pension," the minister said.

The state now uses a worker's last 15 years of earnings as a base for calculating the final pension but Gomez said "we must go from 15 to 20 years, without abandoning the possibility of raising it bit by bit to 25 years."

"The goal is for the majority of one's career to be taken into account when their pension is calculated," he added.

As people tend to earn more money at the end of their career's, extending the period that is taken into account when calculating their pension will lead to a lower base and lower pensions.

Prime Minister Jose Luis Rodriguez Zapatero's 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.

Last week the ruling Socialists and the conservative opposition agreed to extend the number of years of earnings that are used to calculate a pension but an exact time frame was not decided.

The government has said the cabinet will approve the pension reforms on January 28.

© 2010 AFP

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