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Spain to transfer 2.9 billion euros to state pension fund, Budget minister says

FILE PHOTO: Presentation of Spain's 2022 draft budget proposal at Parliament in Madrid

MADRID (Reuters) - Spain will transfer 2.9 billion euros ($2.88 billion) to the state pension reserve fund for the first time in 13 years, Budget Minister Maria Jesus Montero told reporters on Tuesday.

The reserve fund, which is designed to help the state pay pensions when public finances are in trouble, had 2.2 billion euros at the end of 2021.

In 2011, it contained 66 billion euros, when the financial crisis left millions of workers without jobs and the government had to dip into the fund to pay out pensions in the following years.

In 2021, parliament approved a reform of the pensions system that included a 0.6% surcharge on social contributions - dubbed as "intergenerational equity mechanism" - to finance the fund.

The remainder of the fund is invested in Spanish public debt.

A government source said that good employment figures, which this year have surpassed the landmark of 20 million jobs, would allow the government to fulfill its promise to raise pensions in line with the CPI.

"The forecast for how that indicator - the average annual CPI - is going to perform is 8.5%," Montero said, although total pension spending was expected to rise by 11.5% because of new pensioners.

($1 = 1.0086 euros)

(Reporting by Belen Carreño; Writing by Emma Pinedo; Editing by David Latona and Ed Osmond)