Definition of the Toledo Pact

In the 1990s in Spain the sustainability of the public system of the social Security and especially the viability of pensions for the next generations. In that historical context, the majority parties agreed to create a system that would guarantee the stability of pensions. Said system was established in 1995 through a document signed by the main political forces and known as the Toledo Pact.

It must be taken into account, on the other hand, that since 1986 Spain is part of the European Union, a institution which tries to equate the different member states and for this Spain had to carry out a series of reforms in relation to the public pension system.

The fundamental idea of ​​the Toledo Pact

Spain has a population aged and there is a low birth rate. These two parameters affect the sustainability of the pension system, since it is based on the Balance between the number of people who work and those who receive a pension. Currently there are more than 9 million pensioners and some 17 million workers, which implies that the pension of one person is obtained by the economic performance of two, a ratio that is not exactly good. This demographic circumstance is the main factor that has driven the need for the Toledo Pact.

Relevant elements of the Toledo Pact

The pension system is one of the pillars of the so-called welfare state. The Toledo Pact is associated with a series of reforms and commitments focused on the pension system and some of the most relevant are the following:

- The commitment to maintain the standard of living of pensioners regardless of the political party that governs at all times.

- The gradual increase in the retirement age to accommodate the demographic reality to the employment situation.

- The adaptation of pensions to the labor reality in general.

- The balance between benefits associated with the pension and contributions to safety Social.

- The Constitution of a reserve fund to guarantee the collection of pensions at all times.

- The consolidation of computer systems so that the citizen can have information on everything related to pensions.

- The permanent improvement of the management related to the pension system.

- The determination to combat fraud that may affect the sustainability of the pension system.

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