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Employment estimates that it will spend up to 4 billion more of the ' Pension Piggy bank '

Social security plans to exhaust the 10,192,000,000 of the credit granted by the Treasury

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Employment estimates that it will spend up to 4 billion more of the ' Pension Piggy bank '

What is collected for contributions is still unreachable for pensions. This is noticeable when it comes time to deal with extraordinary pay and income tax payments, in July and December. Since 2012, government is resorting to reserve fund to resolve this gap between income and expenditure. But this year has added a new element: A loan from state's general budgets to Social security.

That credit amounts to 10,192,000,000 euros and Ministry of Employment is trying to exhaust it. In July it already consumed 5.986 billion, and for remaining financial needs it is intended to resort to reserve fund, according to highest social security officials responsible for social agents in a meeting held last week.

On that date, y also pointed out that ir foresight is to take this year between 7,000 and 7.5 billion from reserve fund. If one takes into account that in July 3.514 billion was extracted, forecast of employment for December is between 3,500 and 4 billion. However, sources of Social Security warn that final amount will be based on Treasury needs.

The sum of those almost 10.2 billion of credit plus Social security forecasts for reserve fund point to a difference between income and expenses that is closer to 18 billion. This figure is in line with government deficit forecasts for this exercise, which point to red numbers equivalent to 1.6% of GDP. This assumes that in 2017 will not close significantly that hole, since last year deficit reached 1.62% of GDP after posting a lag of 18.7 billion.

And this will continue in spite of great push of affiliation. Thanks to that tug, Social security was in September with 3.5% more of price. That percentage is even higher when it moves to income, which only taking into account evolution of social quotas grows at a rate of 5.1%.

However, that is not enough to compensate for incessant increase in pension bill. According to budgetary execution of first eight months of year, this chapter grows by 3.43%.

When making reserve fund provision, it is to be supposed that savings in pension piggy bank will fall below 10 billion. After those that were extracted in summer, y were 11,602,160,000 if you take price to which assets in which money is invested (bonds of state) were bought. However, in order to know what remnant will be n we will also have to take into account what performance of those assets will be during this period, so it is not enough to make a simple subtraction.

An unknown to clear

The government's decision not to exhaust this year's fund for political cost it would have and increase in revenues that labor market's improvement entails prevent clearing question of when this piggy bank will end. To answer this question, a number of open questions are still needed to be closed. On one hand, you have to know what happens to budgets of 2018. If se are extended, credit

This year could be reissued with an increase linked to what law of deindexing marks. On or hand, we need to know when re will be a pension reform that improves system funding. Neir in Toledo Pact nor at pension table with social agents are re any significant advances in reaching an agreement.

It should be remembered that exhaustion of Fund does not imply that pensions are stopped. If it were to that point, State could resort to debt or direct tax transfers.

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