Evolution of the pension fund

See the evolution of the pensions' piggybank over recent years

The Social Security Reserve Fund, also known as the pension fund or pension piggy bank, is financed by the extra income from Social Security aimed at contributory benefits, as well as by extras generated from the management of temporary disabilities managed by Mutual Funds. The underlying idea is to save in periods of prosperity in order to be able to count on additional resources for the payment of pensions in times of need.

Since its launch in 2000, this reserve, intended to guarantee contributory benefits, has received regular contributions. By 2011, some €6.5 billion had been accumulated, at which point a maximum saving level was set.

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This economic boom lasted for 11 years during which the Social Security system deposited more money than it spent on public benefits, such as pensions. As a result, it filled the fund at a rate of approximately €10 billion a year during the most dynamic period of the Spanish economy.
Year Capital saved (millions of euros
Year
2000
Capital saved (millions of euros
540
Year
2001
Capital saved (millions of euros
1,476
Year
2002
Capital saved (millions of euros
5,852
Year
2003
Capital saved (millions of euros
10,000
Year
2004
Capital saved (millions of euros
19,133
Year
2005
Capital saved (millions of euros
26,773
Year
2006
Capital saved (millions of euros
35,771
Year
2007
Capital saved (millions of euros
45,604
Year
2008
Capital saved (millions of euros
57,158
Year
2009
Capital saved (millions of euros
58,017
Year
2010
Capital saved (millions of euros
64,374
Year
2011
Capital saved (millions of euros
65,830
Year
2012
Capital saved (millions of euros
62,027
Year
2013
Capital saved (millions of euros
53,743
Year
2014
Capital saved (millions of euros
41,634
Year
2015
Capital saved (millions of euros
34,221
Year
2016
Capital saved (millions of euros
15,020
Year
2017
Capital saved (millions of euros
8,095

This is the main source of financing for the Social Security Reserve Fund, but not the only one. With the aim of obtaining the maximum return on the capital saved, while at the same time exposing the savings to the smallest possible risk, the fund managers –the General Treasury of the Social Security– invest the money saved in fixed-income instruments.

Through a specific investment committee, the Social Security Reserve Fund has invested historically in public debt; specifically, the public debt of European powers such as Germany, the Netherlands and France. It has also invested in Spanish debt. So, although since it was begun at the start of the century, up to 2003, practically 100% of the money saved in the fund was used to buy bills and bonds from the Spanish Treasury, this strategy changed after 2004 to diversify the investment.

From 2004 to 2013, the Reserve Fund gradually acquired the public debt of different European countries, eventually amounting to 50% of the total amount invested. However, this tendency changed from 2008, when the Fund began to invest more resolutely in Spanish public debt until it reached the current situation in which, since 2014 the fund has invested exclusively in Spanish government bonds and securities.

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As parallel investment and management criteria, the Reserve Fund prioritizes balanced acquisitions to avoid "excessive concentrations of maturity dates", as the Social Security Institute explains in a document that sets out the strategy to follow to achieve the best return on the existing balance in the pensions piggy bank.

This document also sets out in general terms the “security, rate of return and diversification” criteria.

The surplus of moneys paid into the Social Security Institute and investment of the balance in public debt are the two sources of financing through which the pensions "piggy bank" is filled.

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