A Proposal for Reforming the Spanish Pension System Based on a Notional Defined Contribution Model
DOI:
https://doi.org/10.46661/revmetodoscuanteconempresa.2096Keywords:
Seguridad Social, sistemas CDN, planes de pensiones complementarios, autoafiliación, Social Security, NDC system, complementary pension plans, auto-enrollment.Abstract
The western pension systems and especially the Spanish one will noticeably be affected by an aging of the population that is currently underway. This work proposes a pension model for Spain which would mean deep structural reforms that would guarantee meeting the objectives established by a Social Security system. Our proposal considers a reform that leads to the establishment of a general basic pension fund financed through taxes; a contributory pension fund reached by applying a notional defined contribution model (NDC); and thirdly, an occupational system based on an auto-enrollment system, which we have called the National Saving System (NSS). Projections have been done up to the year 2039 with conclusive results with regard to retirement pensions (indicating the suitability of the model) as well as the GDP relative cost (indicating viability). We analyze how the Spanish Social Security system is an unbalanced one. Our work reveals its lack of sustainability in financial terms, both in the medium and long term. We demonstrate how the new model we are proposing is financially sustainable, and along with a transition period in which the current resources from the Reserve Fund would be used, it would be suitable for the needs of the population.
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