Spain moves forward with tough pension reform

Spain is moving forward with a long-awaited pension reform which will tightly restrict index-linking of pension payouts and aims at saving 33 billion euros ($44 billion) over the next decade.
Rises in pension payments will no longer be automatically indexed to annual inflation, a 30-page government document obtained by Reuters showed on Tuesday.
This is something the European Union have demanded for years but Prime Minister Mariano Rajoy had resisted until now to avoid upsetting some 9 million pensioners.
The reform, which the government plans to present in the next few weeks and hopes will be passed by parliament before the end of the year, will help square the circle of next year’s budget, with expected savings of 800 million euros in 2014.
It will also boost Spain’s efforts to deflate one of the highest public deficits in the euro zone. The country, which may soon exit a two-year recession, has committed to meet deficit to Gross Domestic Product targets of 6.5 percent in 2013, 5.8 percent in 2015, 4.2 percent in 2015, and 2.8 percent in 2016.