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An assessment of the 2011 Spanish pension reform using the Swedish system as a benchmark*

Published online by Cambridge University Press:  18 December 2013

CARLOS VIDAL-MELIÁ
CARLOS VIDAL-MELIÁ*
Affiliation:
Department of Financial Economics and Actuarial Science, University of Valencia, Avenida de los Naranjos, s.n. 46022 Valencia, Spain (e-mail: carlos.vidal@uv.es)
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Abstract

The aim of this paper is to make an assessment of the 2011 reform of the public pension system in Spain using the Swedish pension system as a benchmark, although some reference to the US pension system is also made. The paper focuses on the reform, explaining its aims, breaking down the main contents, critically examining the official view and describing the expected ageing of the Spanish population. This approach complements the quantitative analyses performed by other researchers and will enable us to assess the reformed system with the focus on four main areas: actuarial fairness, actuarial transparency, solvency and communication with the public. The main conclusion is that the reform was a wasted opportunity given that Spain did not take advantage of the lessons learned in Sweden, it did not include any elements for improving the management of pay-as-you-go systems, and there is no sound basis for claiming that the system's sustainability is assured in the medium term, the long term or even the short term. The new parametric reforms currently under consideration in Spain are targeted to correct some of the pension system's design faults that have been highlighted in this paper.

Keywords

D83H55J26Actuarial fairnessindividual pension informationpolitical risksolvencytransparency
Type
Articles
Information
Journal of Pension Economics & Finance , Volume 13 , Issue 3 , July 2014 , pp. 297 - 333
Copyright
Copyright © Cambridge University Press 2013 

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Footnotes

*

Most of the quantitative results presented in this paper come from the Ministry of Labour and Immigration's (now the Ministry of Employment and Social Security's) Fipros project 27/2010, on which the author was the main researcher along with Marta Regúlez-Castillo and Manuel García-García. I am grateful for the financial assistance received from the Spanish Ministry of Education and Science (Ministerio de Educación y Ciencia) project ECO2009-13616 and from the Spanish Ministry of the Economy and Competitiveness (Ministerio de Economía y Competitividad) project ECO2012-36685. Preliminary versions of this paper were presented at the ‘KPMG Conference on Social Welfare’ (KPMG 2011) in Madrid, the ‘Contributivo: Esperienze Internazionali a Confronto’ workshop (INARCASSA 2012) in Rome, the International Conference on Pension System Sustainability (ICPSS 2013) also in Rome, and at a seminar organized by FORINVEST (2013) and the University of Valencia. A preliminary version was given a special mention in the 2012 SCOR Actuarial Prizes for Spain and Portugal. I am grateful to Rafael Núñez, Ana del Solar, Angel Santos, Paola Muratorio, Ugo Inzerillo, Sergio Nistico, Alessandro Trudda, Juan Nave-Pineda, M.Paz Jordá-Durá, Ole Settergren, Edward Palmer, Luis María Saenz de Jauregui, Pierre Devolder, Junichi Sakamoto, Manuela Bosch-Princep, Maximo Angrisani and Manuel Ventura-Marco for their comments and suggestions, and to Peter Hall for his English support. The comments and suggestions made by the journal's anonymous referees were especially helpful in improving the paper. Any errors are my own.

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