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Principles and Directives of the Social Security System

In accordance with the provisions of Art. 41 of the Spanish Constitution, political power and social actors and partners are responsible for guaranteeing a fair, balanced and shared public pension system in the future.

In view of this constitutional mandate, the State is committed to establishing a public protection system and coordinating the financial resources that make said social protection sufficiently viable, although, the Constitution also states that the supplementary aspect of social protection shall be optional, that is, it may be private.

Therefore the Spanish Social Security System, to make the aforementioned constitutional principle into a reality, requires public protective action that guarantees all citizens sufficient protection in situations of need and stable and sufficient financial resources to fund said protective action.

The Spanish Social Security System, in addition to being universal, provides special protection for workers against risks they are subject to as a result of work, including, according to the Constitution, unemployment.

The Social Security model that governed in Spain until recent times, was basically organised according to three main principles: proportionality between the benefit granted and the financial contribution made by the workers (contributive fairness), professional nature of protection related to carrying out a job and little or no consideration of the financial resources available to the protected individual.

These characteristics which provided information to our Social Security System, underwent a significant alteration after the approval of Law 26/1990, of 20 December, on Non-Contributory Benefits of the Social Security, which introduced a second level of protection with the aim of replacing the shortfall in subsistence incomes, irrespective of the professional activity of the beneficiary and their financial contributions to the system (contributions).

In order to understand the true magnitude of the transformation of the principles that guide our Social Security System, we need to refer to the Toledo Pact, set up to analyse and detect problems in the Social Security System and draw up a list of possible lines of action. In particular it emphasised the problems of funding the Social Security and its future development to plan ahead for the actions that should be adopted in order to prevent the increase in the public deficit, as a result of increased benefit payments and in particular, retirement pensions.

The result of this work (Toledo Pact), was approved by full Parliament on 6 April 1995.

The included proposals can be summarised into the following basic mission statement: "to guarantee a future public pension system that is fair, balanced and shared, in accordance with the principles contained in Art. 41 of the Spanish Constitution".

It is worth highlighting some of the recommendations included in the aforementioned report that affect the guiding principles of the Spanish Social Security System, such as:

  • Fairness and contributory nature of the System, strengthening the validity of these principles in such a way that, without prejudice to the principle of solidarity and in a gradual way, benefits are more proportional to the amount of contributions made.
  • Strengthening of the principle of solidarity, insofar as the financial situation allows, adopting measures such as the increase in the maximum age for continuing to receive the orphan´s pension or the improvement in widowhood pension in the case of lower incomes.

In implementing one of the recommendations of the Toledo Pact, a non-permanent commission was set up to assess the results achieved in implementation of the adopted recommendations and based on that, to study its future development, within the criteria of stability, sustainability and equality of benefits for the whole of Spain, which enables the continuity in the improvement in the welfare of pensioners, with a particular focus on smaller pensions, to be guaranteed.

On 2 October 2003, the full Spanish Parliament approved the report drawn up by the non-permanent commission. In this report, apart from reinforcing the conclusions of the 1995 Toledo Pact, new recommendations were introduced which addressed the following issues:

  • The advisability of examining the situation of workers affected by modern methods of work organisation, in particular with regard to the expansion of part-time work, the incidence of temporary employment and the possibilities of making wages and pensions consistent.
  • To study mechanisms that include periods of care and support of children or dependent people as "elements to consider in contribution histories".
  • To set up an integrated system that tackles the phenomenon of dependency from a global perspective.
  • To give special consideration to people with physical, psychological or sensory disabilities.
  • To adopt the measures needed to guarantee the inclusion of citizens from other countries into the social protection system with full rights and obligations.

Also noteworthy for its importance is the Agreement on Social Security Measures, entered into on 13 July 2006, by the government, the General Workers´ Union, the Trade Union Confederation of Workers´ Committees, the Spanish Confederation of Business Organisations and the Spanish Confederation of Small and Medium-Sized Enterprises, which together with the priorities set out by the Toledo Pact in their 2003 parliamentary session, which give rise to Law 40/2007, of 4 December, on urgent Social Security measures, which reiterates the need to maintain and strengthen certain basic principles on which the Social Security System is founded as an objective for guaranteeing its effectiveness and improving the levels of welfare of all citizens.

In this way, the principle of solidarity and guarantee of sufficiency take shape through the gradual improvement and expansion of the protective intensity, as well as the strengthening of the general fund. The contributive fairness of the system has also been improved, providing greater proportionality between the contributions made and the benefits received, and at the same time avoiding situations where there is a lack of fairness in the granting of these benefits. Likewise, progress has been made on the already-initiated path to encourage the voluntary extension of working life beyond the legal retirement age, without forgetting the need to alleviate the negative consequences experienced by older workers prematurely forced out of the labour market.

Finally, we should mention the goal of modernising the system in order to tackle situations created by new family circumstances. All of the above is within the context of the demands arising from the socio-demographic situation from which circumstances such as an ageing population, the increasing incorporation of women into the labour market and the phenomenon of immigration, as well as the harmonising criteria moving towards those set down in the sphere of the European Union, with the aim of guaranteeing the financial sustainability of the pension system.

Furthermore, two aspects should be mentioned that are considered to be of vital importance when completing the general analysis of the principles and directives that support and guide our Social Security System.

The first of those relates to the state ownership of the resources and the obligations of the Social Security by virtue of the provisions of Art. 141.1.17ª of the Spanish Constitution states that the State is responsible for "basic legislation and the financial framework of the Social Security, without prejudice to the implementation of its services by the Autonomous Communities.

Arising from said provision is the equality of rights of insured persons, irrespective of their place of residence and simply for having this status, given that such rights are exercised against a single owner, the State, which is required to apply the principle of financial solidarity without discriminating according to region. Directly related to the above, in Art. 149.1.17ª of the Spanish Constitution, the principle of having a general fund is implicitly included and expressly stated in various legally binding regulations and must be interpreted in light of the constitutional doctrine in the sense of the existence of a single owner (the State) of all resources, obligations and benefits of Social Security, across the entire national territory, irrespective of the fact that said exclusive owner can use different collection and registration bodies.

The principle of a general fund must be understood as the will of the State to streamline over time and across the whole national territory, the distribution of Social Security funds, in order to meet all of its obligations.

To conclude we need to highlight some points that illustrate and characterise the natural vocation and purpose of the Spanish Social Security System:

  • The Social Security must guarantee citizens and their families protection in situations of old age, illness, unemployment and other social deprivation which require assistance over the course of people´s lives.
  • Social Security has become a vital activity and essential element of social cohesion.
  • The Social Security responds universally and unitedly to the range of individual needs in situations that must be protected. This solidarity is demonstrated from a double viewpoint:
    • a) Solidarity between generations: the Spanish system and a distribution system means that younger generations pay contributions to fund the benefits of the older generations or those in need.
    • b) Solidarity between regions: the Spanish system is based on the concept of having a general fund, in other words, contributions collected throughout Spain are used to fund benefits for all Spanish citizens.
  • The Social Security finds its raison d'être in the insecurity of life, through the organisation of a protection system that responds to individual, family and collective needs.
  • The Social Security has become a fundamental and universal right that includes all citizens, offering protection irrespective of their personal and social situation.
  • The Spanish Social Security System has to understood within its historical context, as the result of the progress of Spanish society and process of social battles and conquests.
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