Virtus warns Andorra's pension system risks deficit by decade's end without reforms

Virtus warns Andorran pension system faces deficit by end of decade without reforms

The political party Virtus has called for urgent structural changes to Andorra's pension system, warning it could shift from surplus to deficit by the end of the decade due to population ageing and rising life expectancy.

In a statement released on Thursday, Virtus highlighted the growing imbalance between contributors and retirees. The party noted that the current pay-as-you-go model, introduced in 1968 when average life expectancy was around 75 years, now faces pressure as it nears 85. Pensions must be paid for longer periods than originally anticipated, without sufficient adjustments to contributions.

Andorra has so far maintained financial equilibrium thanks to sustained demographic growth and a rising number of workers, which has built up the Retirement Reserve Fund. However, Virtus cited actuarial projections showing this balance could deteriorate soon. "With more elderly people and fewer young ones, it is mathematically inevitable," the party stated.

Virtus dismissed reliance on immigration as a long-term fix. While regulated inflows of foreign workers could temporarily boost contributions to meet labour needs, these individuals will eventually claim pensions themselves, risking a cycle that could collapse the system.

The party urged review of contributions, benefits, effective retirement age, solidarity mechanisms and options to promote individual savings. It pointed to capitalisation models—where workers' contributions are invested to fund their own retirements—and mixed systems used elsewhere in Europe, without specifying its preferred approach.

Virtus acknowledged that reforms would require tough choices and potential sacrifices but argued inaction would burden future generations, heighten tensions between young workers and retirees, and increase poverty risks. The party called for responsible political action "without ideological bias, without electoral gain, without delay and without fear," insisting there is still time to act and ensure intergenerational fairness.