29 Jan 2011

Spain raises retirement age

6:59 am on 29 January 2011

The government in Spain has raised the age of retirement as part of efforts to convince financial markets that the country can turn its economy around and cut its deficit.

The law was approved by the cabinet on Friday, after obtaining approval from unions following months of negotiations.

Most people will retire at 67 instead of the current 65 under the change, which will be phased in over 14 years starting in 2013.

During negotiations, unions won a concession that workers who have paid into the pension system for 38.5 years will be allowed to retire at 65.

There will be no effect on the government budget before 2015.

According to data from the economy ministry, pensions could account for 14% of Spain's public expenditure by 2040-2050, compared with about 9% in 2010.

Data issued on Friday showed unemployment at 20.3% in the fourth quarter of 2010, its highest in over 13 years.