Alexa

Spanish Cabinet OKs raising retirement age to 67

Spanish Cabinet OKs raising retirement age to 67

Spain's Cabinet approved a plan Friday to raise the retirement age by two years to 67 for most workers, a key structural reform aimed at reassuring markets that are uneasy over the country's finances.
It was the latest bitter medicine for a once-booming country now struggling to crawl out of recession with a series of austerity measures.
Yet the deal gave Prime Minister Jose Luis Rodriguez Zapatero a bit of breathing room as he presides over a struggling economy with a jobless rate of 20.3 percent. His Socialist party trails conservatives badly in the polls with general elections just over a year away and local and regional elections in May.
The retirement reform still needs approval by Parliament, but Zapatero's Socialists have lined up support up from small regional parties to pass the measure.
The proposal is backed by labor unions, a victory for the government. Unions held a massive general strike in September and had threatened another if they did not like the government's pension changes.
The reform is complex, includes a number of sweeteners to win over union support and will be phased in very gradually starting in 2013.
Still, it essentially boils down to this: Once the retirement age has made its way up to 67 in the year 2027, Spaniards will have to work two years longer for a full pension that will in general be smaller than what they get now.
Spain's retirement pension system is now solvent, albeit barely, but the government has warned repeatedly that it will not be in a few decades because of rising life expectancy and a very low birth rate.
Deputy Prime Minister Alfredo Perez Rubalbaca said Friday the pension reform plan came out of three-way talks with Spain's main business federation and unions. He said this consensus should please both Spaniards and investors worried that the deficit- and debt-laden country might follow Greece and Ireland in needing an outside bailout.
With the reform, Spain joins France and Germany in forcing people to work more years before claiming retirement benefits. France raised the minimum retirement age from 60 to 62 last year despite a series of angry street protests, while Germany lifted its retirement age from 65 to 67 in 2007.


Updated : 2020-12-01 07:36 GMT+08:00