The Independent Authority for Fiscal Responsibility (AIReF) publishes the update of its demographic and pension expenditure forecasts. One of AIReF’s functions is to analyze and diagnose the sustainability of public finances. In this regard, the evolution of demographic variables is a fundamental determinant for some public spending items, most especially for pension spending, as well as the basis for the projection of macroeconomic variables.
For this reason, in September 2018 AIReF published its first demographic forecasts for the first time. Subsequently, AIReF, based on its demographic forecasts, published in January 2019 the Opinion on the sustainability of the Social Security system, which, in addition to forecasts on the evolution of pension expenditure, includes proposals to address the structural deficit of the Social Security in the short term and the challenge of aging in the long term.
Two years after the publication of the demographic forecasts, AIReF has updated both its demographic and long-term pension expenditure forecasts. These forecasts incorporate the new data known to date, as well as the methodological improvements that AIReF has been incorporating into its forecasting models in recent years. Finally, the impact of the COVID-19 crisis in the short term has also been incorporated into this exercise. However, in view of the uncertainty, the long-term forecasts have opted to assume that the current crisis will have no structural effects on the Spanish economy.
