02/02/2010 - The Spanish government announced on Friday, 29 January, its intention of postponing the retirement age from 65 to 67 and to increase the number of contribution years used to calculate pension benefits.
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The OECD believes that these measures are important steps in the right direction and would bring Spain closer in line with other OECD countries who have already reformed their pension systems. The OECD also encourages further efforts to promote the sustainability of the public pension system. Possible measures include linking the retirement age to life expectancy, raising the effective retirement age and computing benefits using the entire working life. In order to raise effective retirement ages, the minimum number of years needed to be entitled to a full pension may need to be extended (from the current 35 years), and pension gains for those who continue contributing after 35 years may also be increased.
Such reforms should be complemented with a clearer policy to expand the population’s contributions to private pensions and introduce regulations to raise retirement savings and better protect private pensions from financial market volatility. Private pensions are an important component in the goal of diversifying the sources to finance retirement. Despite its establishment over twenty years ago, Spain’s private pension system is one of the least developed in the OECD area, having accumulated assets that represent around 7% of GDP, below the OECD average of 60%. The coverage of private pensions at 54% of the working population is relatively high compared with other countries. However, the amount of money contributed by those participating is quite low. Around 66% of participants contribute less than 300€ a year.
For a summary of the Spanish pension system as it stood in 2008, please see this summary from Pensions at a Glance 2009 (released June 2009).
For further information on private pensions please see: www.oecd.org/pensions
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Keep on working... At what age do people currently retire in OECD countries? How long do people spend in retirement? Find these statistics on our Factblog.