The reform of the Spanish public pension system: The sustainability factor

This paper analyzes the future impact of the implementation of thesustainability factor, introduced in the last reform of the Spanish publicpension system. This factor aims to regulate the initial pension according tothe evolution of life expectancy. Additionally, it examines what could havehappened in case of an earlier implementation of the factor. The results showthat the factor produces a progressive pension reduction if life expectancycontinues to increase, and pension spending is adjusted to demographic evolution.Specifically, the initial pension could be reduced up to 23 % in 2051 ifthe demographic trend does not change