Spain’s Social Security fund is in worse shape than the U.S. trust fund. It is currently scheduled to be eliminated in 2018. It will be interesting to see the effects on citizens and how the government handle’s the situation. As part of the EU, they will be under the watchful eye of Brussels in addressing this. As a result, the government is between a rock (it’s citizens) and a hard place (EU). With Great Britain leaving the EU, perhaps they will have negotiating room with the threat of following the leader. With the limitations of the EU, the inability to print money like the US, and the lack of time left it will be interesting to see how this unfolds.
Perhaps our leaders are studying Spain to see how they handle this dilemma. Probably not. Please leave your opinions in the comment section below.
MishTalk – Spain’s Social Security system is expected to go broke by 2018. In the US, concerns over such matters are virtually nonexistent. But Spain cannot print Euros, and is already deep in the hole on meeting budget deficit targets.
Spain SS Reserves
Via translation from El Confidencial, Spain’s Social Security Reserve Fund Exhausted by 2018.
The Social Security reserve fund will run out of money in 2018. The cause in bonus payments to pensioners, which consumes every six months (in December and July) over 8.5 billion euros. Revenue from social security contributions are not sufficient to meet the payment obligations.
Starting in 2018, only an extraordinary contribution by the State would make it possible for Social Security can meet its commitments.
The financial problems of Social Security are not a temporary problem. The government itself expects that this year the public pension system will register equivalent to 1.1 percent of GDP deficit (about 11 billion euros ), while in 2017 planned is an imbalance equivalent to 0.9% of GDP.
In 2016, revenues from social security contributions recorded an accumulated a deficit of 12.24% compared to expectations. The deviation is even higher than the already recorded in 2015.
Spain Budget Deficit Wildly Off Target
Spain has missed watered down budget deficit targets a half-dozen times. Spain is already under pressure from Brussels to cut spending or hike taxes, by 8 billion euros.
Something has to give.
For more Spain’s fiscal mess, please see Spain Wildly Off Budget Target, Expect Alarm Bells and Warnings.
Mike “Mish” Shedlock