Business think tank in Spain wants new government to extend retirement age to 72

Business leaders in Spain are calling for the retirement age to be pushed back to 72 in a bid to improve the country’s economic outlook.

In a proposal to the new government that will be elected in the general elections on 23 July, the Círculo de Empresarios organisation suggested the retirement age be raised from 67 to between 68 and 72, and to come into force in 2027.

The group, which operates as a think tank, also proposed the government lower redundancy pay from 33 days to 20 days worked per year. The cost of dismissal for temporary workers should be raised from the current 12 days to 16 days, it also proposed. The idea would encourage the system to move towards a 'single contract', which has previously been proposed by political parties such as Ciudadanos.

The organisation also advocated a reduction in taxes on banks and electricity companies. President of the group, Manuel Pérez-Sala, said "it is not necessary to panic" as the suggestions are just ideas already in force in other European countries.

The Círculo de Empresarios has proposed that it would be “voluntary” for people to work up until 72 years of age, but a “small penalty” applied to those who decided to retire earlier. Pérez-Sala said the sooner this measure is implemented the less likelihood that "the Social Security system will go bankrupt, which could happen within five years".

Spain approved a new pension reform in March, which offers greater flexibility in how pension payments are calculated. Under the new system, pensioners will be able to decide to calculate between the previous 29 years of work excluding their two worst years, or the current system which is of the prior 25 years. It also established a solidarity quota for high incomes, improved compensation for women's contribution gaps and minimum pensions.

But the Círculo de Empresarios said the reform is not enough. "It only delays the problem, is unwise and will demand a great sacrifice from current workers,” Pérez-Sala said.

The organisation insisted on the need to adopt a system of notional accounts, whereby each contributor has his or her own contributions and retirement pension prospects.

In the open letter to the future governments, the business think tank also called for the elimination of the Wealth Tax because it "harms savings and private initiative", and to simplify the structure of IVA sales tax by reallocating rates.