Andorran PS Advocates Pension Reforms to Bolster Public System

The Andorran Social Democratic Party (PS) advocates pension reforms that strengthen the public system without dismantling it, drawing on analysis from Spanish public finance expert Ignacio Zubiri of the University of the Basque Country.

Susanna Vela, PS parliamentary group president, outlined this stance at a party-organized lecture by Zubiri at La Llacuna cultural centre. Zubiri had addressed the special parliamentary commission on pensions earlier that day, where efforts continue toward consensus on changes—potentially limited ones—this legislative term.

Zubiri highlighted the system's strengths, including Europe's largest reserve fund at 45.8% of GDP, compared to Spain's 0.6% and France's 7.3%. He called it moderately generous yet low-cost: pensions replace 41.5% of final salary (below EU norms like Spain's 80.4% or France's 56%), equal 29% of average wages, and account for 4.6% of GDP. Retirement pensions dominate spending, with disability and widowhood benefits minor.

He criticized recent actuarial studies for conservative assumptions that overstated costs and understated contributions, fueling undue alarms about deficits or collapse within 20 years. Population ageing and system maturation will increase costs as a GDP share, but steady 1.6% annual job growth could counter this. Zubiri cautioned against upending the public model on such shaky long-term forecasts.

Mandatory private plans offer no fix, he argued, pointing to Spain's low or negative recent returns—only high-risk equity-heavy ones performed adequately. For someone earning €1,500 monthly and contributing €150 over 30 years, a private plan might deliver just €180 monthly, or 13.5% of salary, leaving retirees vulnerable without robust public support. Andorra must choose, he said: private pensions or public ones partly tax-funded. "The public system is the only option to ensure a reasonable living standard in retirement," Zubiri stated, warning that private models carry major risks and are no panacea. "Citizens must understand that."

His recommendations include raising contributions by four points, extending eligibility years for non-residents, increasing fiscal pressure by one point to 28.8% of GDP, drawing up to 2% annually from reserves, and having government cover shortfalls if needed. Vela emphasized untapped fiscal margins, noting sectors that currently evade taxes and fail to contribute fully to national wealth. She defended hikes but said details—whether borne by workers or partly state-funded via taxes—remain under discussion, balancing citizen capacity and long-term equity.

The PS will pursue these in the commission, Vela said. "We support reform but not breaking the system; we must act cautiously over time." She rejected private plans, insisting: "This must remain public. We see it as viable and want changes for sustainability." While opposing tax increases in principle, the party accepts private contributions.

Attendees included Democrats' Jordi Jordana and Berna Coma, Interior, Economy, Labour and Housing Minister Conxita Marsol, CASS director Marc Galabert, and reserve fund head Jordi Cinca. Vela could not confirm reforms this term but noted initial party-expert consensus points that way.