Andorran PS Pushes Pension Reforms to Preserve Public System

The Andorran Social Democratic Party (PS) is pushing for pension reforms that preserve the public system, relying on analysis from Spanish public finance expert Ignacio Zubiri, a professor at the University of the Basque Country.

Susanna Vela, head of the PS parliamentary group, presented this position during a PS-hosted lecture by Zubiri at La Llacuna cultural centre. Earlier that day, Zubiri had spoken to the special parliamentary commission on pensions, which is seeking consensus on changes—possibly minimal ones—this legislative term.

Zubiri praised Andorra's system for its strengths, notably Europe's largest reserve fund at 45.8% of GDP, far exceeding Spain's 0.6% or France's 7.3%. He described it as moderately generous with low costs: pensions replace 41.5% of final salary (below EU averages like Spain's 80.4% or France's 56%), equal 29% of average wages, and consume just 4.6% of GDP. Retirement benefits drive most spending, with disability and widowhood pensions minor.

He faulted recent actuarial studies for overly conservative assumptions that inflated pension costs and understated contributions, leading to exaggerated warnings of deficits or collapse within 20 years. While ageing populations and system maturation will raise costs as a share of GDP, steady job growth of 1.6% annually could offset this. Zubiri warned against overhauling the public model based on such uncertain projections.

He rejected mandatory private plans as no solution, citing Spain's low or negative recent returns—only high-risk equity-focused ones fared well. For a €1,500 monthly earner contributing €150 over 30 years, a private plan might yield just €180 monthly, or 13.5% of salary, risking poverty without a strong public foundation. Andorra now faces a choice, he said: private pensions or public ones financed partly by taxes.

Zubiri recommended boosting contributions by four points, extending system eligibility years for non-residents, raising fiscal pressure by one point to 28.8% of GDP, and using up to 2% annually from the reserve fund. The government could cover any shortfalls if required.

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 confirmed the PS will advance these ideas in the commission. "We back reform but not breaking the system; we must proceed cautiously over time," she said, rejecting private plans outright. "This must stay public. We see it as viable and seek changes for sustainability." She noted opposition to tax hikes yet readiness for private contributions.