Andorra Pension Leaders Warn of Lost Year on Reform as Viability Risks Grow

Jordi Cinca, president of the Fons de Reserva de Jubilació (FRJ), and Marc Galabert, president of the CASS board of directors, warned on Tuesday that another year has passed without progress on pension system reform, heightening risks to its long-term viability.

Appearing before the General Council's specific commission on pension sustainability, both officials expressed frustration over the lack of advances. "It's evident that another year has been lost," Cinca stated, noting that known demographic pressures have only intensified the challenge. Galabert described the reform as unavoidable, adding, "The best time was yesterday; if asked yesterday, I would have said the day before."

Current dependency ratios stand at roughly three contributors per pensioner, but projections indicate this will drop to about 2.6, with contribution income nearing pension payouts. By 2040, pensioner numbers are expected to double, driving annual costs to around 570 million euros. Maintaining current ratios would require more than doubling contributors from around 40,000 to over 80,000—a scenario Cinca called difficult for Andorra to absorb.

Cinca urged policymakers to weigh data on birth rates, immigration, employment, and pensioners together, warning that delays force harsher measures later. He stressed that while parametric adjustments like higher contributions are possible, structural changes incorporating capitalization might be needed, though the FRJ's role is limited to providing data and alerts, not deciding policy. "Any model is legitimate; doing nothing is not," he said, encouraging parliamentary groups to propose options for impact assessments and phased implementation.

Galabert noted decelerating growth in salaries and employment mass, with the general branch showing a 38 million euro deficit in 2025 and shrinking surpluses in the pension branch. Committed points total 151.8 million for nearly 195,600 contributors, worth about 410 million euros at current values of 2.77 euros per point. Superavits persist with 2-2.5% annual growth, but margins are narrowing.

The FRJ reported a 6.39% return for 2025, beating its 5.70% benchmark and outperforming comparable Spanish (4.85%), Italian (5%), Eurozone mixed (4.63%), and Swiss (5.81%) funds. This yielded 105.4 million euros in portfolio gains, with a net accounting result of 131.8 million euros after 2.3 million in fees. Ten-year cumulative returns averaged 28.2%, exceeding inflation and bank deposits. Early 2026 performance is projected at 2.7-2.8% through May, despite market volatility.

Officials emphasised that strong financial results do not negate reform needs, as actuarial trends point to inevitable imbalances. Cinca defended the studies' reliability, attributing past variances to growth but insisting the overall direction demands action.