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Inés Fernández-Pontes
MADRID – Controversy involving the alleged use of EU funds to top up shortfalls in pensions has sparked a major debate in Spain.
The Spanish Court of Auditors revealed last week a series of “budget modifications” which included the use of €2.4 billion in funds from the Recovery and Resilience Facility (RRF), the primary engine of the EU’s post-pandemic recovery package, to top up pensions in 2024.
The RRF consisted of grants and loans supposedly linked to specific economic reform and investment objectives, initially not earmarked for ordinary expenditures such as social spending.
Madrid authorised the use of “surplus appropriations” from the post-Covid recovery funds, said auditors, because of an “insufficiency of budgetary appropriations to meet unavoidable obligations related to civil service pensions”.
The exceptional modifications “should have been better justified”, the auditors concluded.
Spain is the second-largest recipient of EU post-pandemic funds, having already received €60.5 billion in grants and €17.3 in loans from the total €724 billion European recovery package.
“It is absolutely unacceptable to use EU funds from the RRF to cover up budgetary problems in the national pension system,” Andreas Schwab, the chairman of the European parliament’s budgetary control commitee, told the newspaper El Mundo on Monday.
Last week, the Spanish newspaper reported that Pedro Sánchez’s Socialist-led government had apparently diverted at least another €8.5 billion to pay pensions, minimum living wage and other social spendings in 2025.
A spokesperson from the country’s Finance Ministry dismissed claims that funds had been “diverted” from the EU’s Covid recovery fund as “categorically false”.
“Not a single euro from the Next Generation EU funds has been used for any purpose other than the recovery plan,” the spokesperson added, explaining “budget appropriations vary from year to year, and shifts occur between sections”.
Elías Bendodo, a senior figure in the conservative Popular Party warned of potential sanctions from the EU, claiming such moves are a result of Sánchez failing to present a national state budget. “The consequences are getting worse and worse,” he said last week.
Faced with parliamentary deadlock, Sánchez has leaned heavily on his 2023 spending plan – the largest in history – rolling it over again and again to keep the state running in the absence of backing from his coalition partners since he took office for a second term.
Amid rising pressure from an aging population, pension sustainability is the Spanish government’s primary long-term fiscal challenge.
According to an OECD study, Spain allocated 13.7% of its GDP to pension spending in 2025. The study forecasts that Spain will be the country allocating the largest share of its GDP to pension spending by 2050, at 17.3%.
The European Commission said it is “currently reviewing the information and are in touch with the Spanish authorities” said a spokesperson, adding EU capitals “may also use liquidity from RRF payments to cover other outlays.”
(bw, cs)
Amid rising pressure from an aging population, pension sustainability is the Spanish government’s primary long-term fiscal challengeInés Fernández-Pontes
MADRID – Controversy involving the alleged use of EU funds to top up shortfalls in pensions has sparked a major debate in Spain.
The Spanish Court of Auditors revealed last week a series of “budget modifications” which included the use of €2.4 billion in funds from the Recovery and Resilience Facility (RRF), the primary engine of the EU’s post-pandemic recovery package, to top up pensions in 2024.
The RRF consisted of grants and loans supposedly linked to specific economic reform and investment objectives, initially not earmarked for ordinary expenditures such as social spending.
Madrid authorised the use of “surplus appropriations” from the post-Covid recovery funds, said auditors, because of an “insufficiency of budgetary appropriations to meet unavoidable obligations related to civil service pensions”.
The exceptional modifications “should have been better justified”, the auditors concluded.
Spain is the second-largest recipient of EU post-pandemic funds, having already received €60.5 billion in grants and €17.3 in loans from the total €724 billion European recovery package.
“It is absolutely unacceptable to use EU funds from the RRF to cover up budgetary problems in the national pension system,” Andreas Schwab, the chairman of the European parliament’s budgetary control commitee, told the newspaper El Mundo on Monday.
Last week, the Spanish newspaper reported that Pedro Sánchez’s Socialist-led government had apparently diverted at least another €8.5 billion to pay pensions, minimum living wage and other social spendings in 2025.
A spokesperson from the country’s Finance Ministry dismissed claims that funds had been “diverted” from the EU’s Covid recovery fund as “categorically false”.
“Not a single euro from the Next Generation EU funds has been used for any purpose other than the recovery plan,” the spokesperson added, explaining “budget appropriations vary from year to year, and shifts occur between sections”.
Elías Bendodo, a senior figure in the conservative Popular Party warned of potential sanctions from the EU, claiming such moves are a result of Sánchez failing to present a national state budget. “The consequences are getting worse and worse,” he said last week.
Faced with parliamentary deadlock, Sánchez has leaned heavily on his 2023 spending plan – the largest in history – rolling it over again and again to keep the state running in the absence of backing from his coalition partners since he took office for a second term.
Amid rising pressure from an aging population, pension sustainability is the Spanish government’s primary long-term fiscal challenge.
According to an OECD study, Spain allocated 13.7% of its GDP to pension spending in 2025. The study forecasts that Spain will be the country allocating the largest share of its GDP to pension spending by 2050, at 17.3%.
The European Commission said it is “currently reviewing the information and are in touch with the Spanish authorities” said a spokesperson, adding EU capitals “may also use liquidity from RRF payments to cover other outlays.”
(bw, cs)
