Source: European Parliament
The Commission assesses fiscal sustainability in a comprehensive way, considering a country’s overall public finances at different time horizons.
For this, the Commission accounts for the expected change in age-related spending, including for pension and healthcare systems. Long-term projections are prepared and discussed with all Member States within the Ageing Working Group and published in a triennial ‘Ageing Report’.
If pensions contribute to an identified sustainability risk, the Commission will signal this through several channels, including through the European Semester of economic and fiscal policy coordination.
With the introduction of the Recovery and Resilience Facility an extra incentive was provided for Member States to implement reforms. Spain committed to a pension reform in its recovery plan.
The Commission preliminary assessment of the fourth payment request[1] considered the fiscal sustainability requirements of the pension reform as satisfactorily fulfilled[2], noting that ‘the closure clause legislated as part of Milestone 409 ensures that corrective measures enter into force as soon as necessary so that the long-term fiscal sustainability of the pension reforms […] is preserved even under less favourable developments than assumed’.
Since 2024, under the revamped fiscal rules, Member States commit to a 4-year plan during which public finances are put on a sustainable footing.
This adjustment period can be extended from four to seven years — as is the case for Spain — if Member States commit to set of reforms and investments, notably to improve the long-term budgetary and economic outlook.
- [1] https://commission.europa.eu/document/download/e8b93743-5a80-4c10-9caa-4dabedc95728_en?filename=C_2024_4171_1_EN_annexe_acte_autonome_nlw_part1_v2_1.pdf.
- [2] These requirements are set out in the Council Implementing Decision: https://data.consilium.europa.eu/doc/document/ST-10150-2021-ADD-1-REV-2/en/pdf.