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Spain taps social security reserve fund to pay pensions

Source: Reuters - Tue 23rd Jul 2013
Spain taps social security reserve fund to pay pensions

Spain tapped its social security reserve fund for the 2nd time in a month on Monday, the Labour Ministry said, to help with extra summer pension payments as unemployment and retirement costs deplete government funds.

The government turned to the fund for 3.5 billion on July 1 then for a further 1 billion on Monday. Spanish pensioners receive 2 cheques in summer and 2 over the Christmas holidays.

Spain was forced to tap the reserve for the 1st time last year to help pay pension costs, using some 7 billion.

Record high unemployment, which hit over 27% in Q1 and a growing number of retirees on a state pensions have put an unprecedented strain on Spanish social security funds.

The fund was worth 59.3 billion, or 5.65% of GDP, after the operation on Monday, the Ministry said.

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