The Social Security Reserve Fund (nicknamed , "the piggy bank of the pensions") was created in 2000 with the aim of investing current
social security
Welfare, or commonly social welfare, is a type of government support intended to ensure that members of a society can meet basic human needs such as food and shelter. Social security may either be synonymous with welfare, or refer specificall ...
surpluses to finance future State Pension Scheme shortfalls. It was created as one of the recommendations of the tri-partite of 1995 between government, employers and trade unions. In 2009 the fund amounted to 60 Bn€ and in 2010 assets had increased to 64 Bn€.
Origins
The establishment of the Social Security Reserve Fund was part of the 1994
Toledo Pact
The Toledo Pact ( es, Pacto de Toledo) was an ambitious reform of the Spanish social security system approved by the Spanish parliament on 6 April 1995, aimed at streamlining and guaranteeing the future of the Spanish social security system. The b ...
agreement between government, employers and unions. Under the agreement the surpluses of the social security system were to be paid into the reserve fund with the aim of security pension payments in the future when demographics bring the pensions system into deficit.
Finances
Starting in 2000 and until 2008 the
Spanish government
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paid 45 Bn euros into the fund while investment income from the fund reached a total of 17 Bn eur.
The economic crisis caused a significant reduction in employment and a similar fall in
payroll taxes
Payroll taxes are taxes imposed on employers or employees, and are usually calculated as a percentage of the salaries that employers pay their employees. By law, some payroll taxes are the responsibility of the employee and others fall on the em ...
leading to a social security deficit. In 2012 and 2013 the government tapped the fund for 18 Bn eur as a measure to avoid not meeting its deficit target und EU rules. In 2014 it is expected to withdraw another 11 Bn,
Having reached 66 Bn euros in 2010 it fell to 59 Bn in 2012 and will end 2013 with 53 Bn eur.
Fund
References
{{DEFAULTSORT:Pensions In Spain
Spain
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Economy of Spain
Sovereign wealth funds