CEU Cefas experts propose radical measures to save the pension system. Spain's pension system is facing a demographic crisis. Experts suggest raising the retirement age to 73 and encouraging birth rates to prevent a financial collapse and secure payments for future generations.
The retirement age in Spain may be raised to 73 years — this is the conclusion of a recent CEU Cefas report on the future of the state pension system. The authors of the study warn: without radical changes, the country risks being unable to fund pensions within the next few decades.
The main reason is demographic imbalance. According to CEU Cefas, the current pension distribution model was designed for a society with high birth rates and a large workforce. Today, however, Spain is experiencing record low birth rates, rapid population aging, and increased life expectancy. As a result, there are fewer and fewer workers per pensioner, and the system's budget deficit has persisted since 2011.
Experts point out that conventional solutions — raising the retirement age, increasing immigration, or developing private savings — do not solve the problem individually. For instance, the influx of migrants cannot compensate for the shortage of young workers due to low qualifications, unstable employment, and pressure on social services. Private savings, the authors note, are important but cannot replace the foundation of genuinely employed and contribution-paying citizens.
The report highlights that over the past 15 years, the average pension in Spain has increased by 65–70%, while the average salary has grown by only 22–25%, and this increase does not even cover inflation. Spain is also among the countries with the highest pension-to-last-salary ratio — the so-called replacement rate.
Demographic challenge
CEU Cefas insists: without increasing the birth rate and comprehensive measures to rejuvenate the population, the pension system is doomed to chronic deficit. In 2023, pension payments accounted for 11.2% of the country's GDP, and the direct deficit of the system in 2024 reached almost €34 billion.
As a solution, it is proposed not only to gradually raise the retirement age, but also to encourage families to have children. Ideas include increasing pensions depending on the number of children, as well as revising survivor pensions: payments would be maintained only for those truly vulnerable, with amounts increased if children are present.
The model of the future
The authors of the report propose moving to a mixed system: the state guarantees a minimum pension, while the rest is formed through individual savings and corporate pension plans. They also recommend encouraging later retirement, allowing flexible combinations of work and pension, and calculating payments based on the entire working life.
Experts emphasize that the pension issue is not ideological, but arithmetic. If demographic trends are not reversed and the system not reformed, even the harshest measures will only postpone the crisis.
For reference: according to Eurostat, Spain is among the EU countries with the lowest birth rate and a rapidly aging population. The issue of pension reform has been debated in the country for several years, but such radical proposals as raising the retirement age to 73 are being voiced at the expert level for the first time.
