El sistema de pensiones contributivas en España: Cuestiones básicas y perspectivas en el medio plazo

This paper surveys the main issues in the debate about pensions. The first part of the paper contains some calculations of the future evolution of the pension burden in Spain. The second part of the paper comments on the effects of policy measures that could either control expenditures on pensions or finance it. The main conclusion of the paper is that the Spanish pension system is bound to suffer significant reforms. Different measures entailing both costs and advantages are available. However, there are no simple alternatives like "public system versus private system" or "pay-as-you-go versus capitalisation". First, there are good reasons for maintaining a public pension system offering social insurance. Secondly, most of the advantages associated with privatisation are more apparent than real. In fact, any gains in efficiency which could brought up by reform are more related to the details of how the system is designed rather than with its public or private nature. What is important is to do something, the sooner the better, to eliminate political uncertainty about the pension system. Our discussion of the policy options available leads us to conclude that, most likely, the optimal pensions system is a mixed system, partly capitalised, partly on a pay-as-you-go basis. Both systems have efficiency and equity effects and, therefore, it seems intelligent to combine them in the solution to the pension problem.