Spain to Increase Retirement Age and Freeze Pensions?

By: Ian Campbell | Mon, Sep 24, 2012
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An article reported Friday that:

Increasing the retirement age by two years and freezing pensions in order to possibly save 4 billion euros a year is a statement that is based on a calculation using assumed inflation rates. Stated differently, I assume the so-called savings really are savings measured against what would be the forward pension costs but for removing inflationary increases to pension costs from the equation.

Under any circumstances, these strike me as 'band-Aid moves' at best. Moreover, if I am right in what freezing means, there is no austerity in that in the context of reducing current costs.

Watch carefully for announcements from and about Spain this week and next, where for me what happens with Spain seems critical to what is likely to happen in the Eurozone generally.

You might also want to read Spain's Fiscal Deficit 8.56% of GDP in First Half; Impossible Second Half Targets.

Topical Reference: Spain targets pensions as bailout likelihood increases, from The Financial Post, from Reuters, Julien Toyer, September 21, 2012 - reading time 3 minutes. Also read Spain's Fiscal Deficit 8.56% of GDP in First Half; Impossible Second Half Targets, from Mish's Global Economic Trend Analysis, Michael Shedlock, September 21, 2012 - reading time 2 minutes.

 


 

Ian Campbell

Author: Ian Campbell

Ian R. Campbell, FCA, FCBV
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Through the Economic Straight Talk Newsletter Ian R. Campbell shares his perspective on the world economy, the financial markets, and natural resources. A recognized business valuation authority, he founded Toronto based Campbell Valuation Partners (1976), Stock Research Portal (2007) a source of resource companies market data and analytic tools, and Economic Straight Talk (2012). The CICBV* annually funds business valuation research in his name**. Contact him at icampbell@srddi.com.
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