Inflation eats up all savings without distinction. Whether private or public. It does not distinguish amounts or endorsements. And this also impacts el Pension Reserve Fund that the Government of Pedro Sánchez insisted on rescuing workers and companies with another tax, while they also covered the funds necessary to pay the pensions that contributions are no longer enough. A mirage that also suffers from the reality of price rise that Sánchez and his economic cabinet are unable to stop.
With inflation at 3.3% in March (and rising) the low financial returns obtained by the Reserve Fund of Social Security, known as the pension piggy bankseem insufficient for this artifice – with the pension system in structural deficit – to be able to transmit a guarantee of reliability in the future of the public pension system.
The reality is that more than a profitable savings instrument, the pension piggy bank has become a deposit of low or even negative profitability that fails to preserve the value of money over time.
The Social Security Reserve Fund reached 9,376.7 million euros as of December 31, 2024, the highest level since December 2017. From December 31, 2023 to December 31, 2024, contributions to this fund have totaled 3,798.21 million euros. Most of the allocations made in 2024 (3,576.60 million) come from the Intergenerational Equity Mechanism (MEI), which came into force in 2023, to provide resources to this fund through a percentage of the contribution for common contingencies that is distributed between the company and the worker; and that takes into account the same distribution that is carried out in social contributions.
for exercise 2025the forecast of the Minister of Inclusion, Social Security and Migration and Government spokesperson, Elma Saizwas that the allocations by the MEI would amount to 4,400 million euros and that the Fund’s returns would exceed 263 million for a total of about 14,000 million euros.
But size is not the only problem. The key question is what that money yields, or rather how little it yields compared to the increasing cost of the pension system and inflation.
In practice, the Spanish Reserve Fund obtains an extremely low profitability. Different international reports place its performance among the lowest of the reservation systems of developed countries. In some recent periods, the average return has even been negative, meaning that the fund loses purchasing power despite growing in nominal terms.
The national debt does not beat inflation
The main reason is in your investment structure. Spain concentrates almost the entire fund in national public debt. This model, designed to guarantee absolute security, sacrifices profitability. While other countries diversify in a combination of financial assets, variable income or international investmentsthe Spanish system prioritizes the purchase of bonds from the State itself, with very limited returns.
The result is a fund that meets a more accounting than financial function. Its growth depends largely on internal transfers of the system and additional contributions such as the Intergenerational Equity Mechanism, an extra contribution that workers and companies pay from 2023. However, this mechanism does not guarantee a real return on accumulated savings, since the system as a whole continues to need additional financing.
The international comparison is especially striking. According to data from the OECDthe reserve funds that achieve the best results are those who diversify your wallet. Countries like Sweden or Japan They have achieved stronger returns by combining public and private assets, allowing them to protect the fund’s value against inflation and improve its future response capacity.
In the Spanish case the opposite occurs. The conservative strategy avoids financial risks, but also prevents generating significant returns. In real terms, this implies that the fund not only grows little, but in some years it loses value if inflation is discounted.
The problem is exacerbated when comparing the size of the fund with the system’s obligations. As of today, the Reserve Fund is not even enough to pay a monthly payment. In March, pension spending far exceeded 14,000 million euros (14,307.7 million). That is to say, even in its most optimistic scenario, the piggy bank has a very limited coverage capacity compared to a system that is financed month by month.
Permanent deficit
Added to this imbalance is the structural deficit of Social Securitywhich different analyzes place above 100,000 million of euros. This hole is financed largely through State transfers and public debt issuance, which reinforces the feeling that The system does not generate real net savings, but rather redistributes resources within the very perimeter of the public sector.
The Independent Fiscal Responsibility Authority (AIReF) has focused precisely on this contradiction. In his latest reports, the supervisor questioned the meaning of increasing the Reserve Fund when the system remains in deficit. From his point of view, the fund should reflect a real surplus, not a mechanism that coexists with permanent needs for external financing.
The debate is not only technical, but also economic. In a context of persistent inflation, profitability from the background becomes an element clue. An asset that underperforms the price increase loses real purchasing power. And that means that the savings accumulated today may be worth less in the future, just when the system will need it most.
The underlying problem is that the logic of the Reserve Fund is not designed to maximize profitability, but to guarantee security and immediate liquidity. In a system subject, furthermore, to a population pressure increasing, so that defensive strategy may be insufficient.
Spain faces a scenario in which pension spending will continue to increase over the coming decades due to the aging of the population. With more retirees and fewer workers per pensioner, the financial stress of the system will be structural. Against this backdrop, the fund’s ability to generate returns becomes even more relevant, because it determines the extent to which it can act as real mattress.