Spain to push forward on pension reform

The Spanish government intends to raise the retirement age and change the calculation method of pensions as part of an overhaul aimed at reducing the public deficit, Labour Minister Valeriano Gomez said yesterday.
"The best way to extend the length of working life is to push back the age of retirement to 67. Those who wish to retire at 65 can do so, but in this case they must accept a reduction in their pension," the minister said.
The state now uses a worker's last 15 years of earnings as a base for calculating the amount of pension benefits but Gomez said "we must go from 15 to 20 years, without abandoning the possibility of raising it bit by bit to 25 years."
"The goal is for the majority of one's career to be taken into account when their pension is calculated," he added.
As people tend to earn more money at the end of their careers, extending the period that is taken into account when calculating their pension will lead to a lower base and lower benefits.
Last week the ruling Socialists and the conservative opposition agreed to extend the number of years of earnings that are used to calculate a pension but an exact time frame was not decided.
Prime Minister Jose Luis Rodriguez Zapatero's government has promised a radical change to pensions in early 2011 to trim the public deficit and soothe market fears that Spain could be trapped in a European debt quagmire that has swamped Greece and Ireland.
Gomez said there would be exceptions to the higher age of retirement for those with "hard jobs" or for people who have contributed to the system for "36 or 37 years".
Zapatero reiterated his commitment to the reforms on the sidelines of a European Union summit on Friday, and his cabinet is expected to approve the measures on January 28.