The financial situation of the Spanish Social Security system is one of the primary concerns in Spain. The current pension system is unsustainable and has been modified twice in recent years to help alleviate the concerns.
Previously, the Government passed a law which delayed the retirement age from 65 to 67 and also modified the method of calculating pension payments. The current government has continued along the same path of reforms and recently revised the method of calculating cost of living adjustments and also introduced a "sustainability factor" to the pension calculations.
The sustainability factor, which will come into force in 2019, links the amount of a pension with the life expectancy of the retirees every five years, according to changes in life expectancy during that period. With this new way of calculating the pensions, the Spanish government hopes to avoid increasing pension costs as a retiree's life expectancy increases.
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