The Government is working hard to settle the first phase of the pension reform with which it is intended to clear the financial horizon of the System. After the elimination of improper, non-contributory expenses, and the recovery of the labor market as well as workers’ contributions once the effects of the pandemic recede, the Government expects that the Social Security deficit will close, leaving zero -that is, reaching the budgetary balance- by the end of next year 2023 .
Thus, the Executive with the Minister of Inclusion, Social Security and Migration, José Luis Escrivá, at the helm gives a period of 24 months, barely two years, to reverse a situation aggravated by the impact of the pandemic.
Specifically, the speed with which it is expected to close the budgetary gap recorded each year by Social Security will be possible thanks to part of the recommendations of the Toledo Pact for reforming the System and that the cabinet of the competent minister, José Luis Escrivá , has already advanced in the current General State Budgets: the separation of those known as improper expenses of the Social Security and their imputation to the Budgets.
A figure that this year will mean a cut in the deficit of 14,000 million euros at the end of the year (the cost of these welfare and non-contributory benefits, or other items such as financing active employment policies).
In fact, without taking into account the deficit of last year, which exceeded 50,000 million euros for the disbursement of aid for companies and workers to face the pandemic and the exemptions from contributions that accompanied these measures, the deficit that was coming assuming the System on a recurring basis amounted to 18,000 million euros -17,000 million in 2019-.
This transfer from the State that is already contemplated in the 2021 Budgets for the assumption of improper Social Security expenses worth 14,000 million euros, the equivalent of two thirds of the deficit that the system registered in 2019 (17,500 million euros) .
In this sense, according to official sources, another third of the deficit could already be settled by the end of this legislature if new improper Social Security expenses are derived from the Central Budget – the Government plan foresees taking out more than 22,000 million euros of expensesnon-contributory-.
And it also improves the so-called Social Security contributory balance, that is, the difference that exists only between the volume of paid social contributions and the cost of pensions, but only those of the contributory level, such as retirements.
A first green outbreak of this financial trend of the System, where the conversion of loans into annual current transfers has already meant a balloon of oxygen in their accounts, appeared precisely this Monday after knowing the budget balance of the different levels of the Administration. Thus, Social Security registered a surplus of 96.37 million euros in the first four months of the year, the equivalent of 0.01% of GDP, according to data from the ministry.
New loan for the extra
However, the Council of Ministers this Tuesday has agreed to grant a loan of 13,830 million euros to the General Treasury of Social Security to balance the accounts of the system in relation to the payment of pensions or benefits for temporary disability (IT) , as announced by the Minister of Finance and Government spokesperson, María Jesús Montero.
In the press conference after the Council of Ministers, Montero specified that this transfer to Social Security had already been determined and consigned in the General State Budgets (PGE) for 2021, based on the financial situation of Social Security. Thus, a loan from the State to the system was budgeted for 13,830 million euros in order to guarantee the financial balance of the System.
José Luis Escrivá’s ministry justified the loan, recalling that in June and November, Social Security jointly pays the ordinary and extraordinary payroll of pensions, worth 20,000 million euros.