Spain: The evolution of the Spanish private pension system - 1994-2019

Abstract

In 1987, Spain enacted comprehensive legislation to encourage and regulate supplementary pension plans that marked the beginning of a modern employer-provided pension system. This chapter evaluates how the Spanish pension system has developed over the ensuing 25 years from 1994 to 2019. The supplementary pension system is less well-developed in Spain than some other countries in Europe, with it having relatively low coverage rates. Over this time period, however, pension coverage rates have increased, in part due to the decline in replacement rates provided by the Spanish social security. More workers are covered by individual account pensions than employer-provided pensions. A positive effect of the Spanish social security and pension systems is that the poverty rate for men ages 65 and above is slightly lower than the EU average for older men, while the poverty rate for older Spanish women is substantially lower than the EU average for older women.