Spain taps social security reserve fund to pay pensions

MADRID Mon Jul 22, 2013 3:03pm EDT

Workers pull optical fiber cable in the Andalusian capital of Seville, southern Spain April 9, 2013. REUTERS/Marcelo del Pozo

Workers pull optical fiber cable in the Andalusian capital of Seville, southern Spain April 9, 2013.

Credit: Reuters/Marcelo del Pozo

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MADRID (Reuters) - Spain tapped its social security reserve fund for the second 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 euros ($4.6 billion) on July 1 then for a further 1 billion euros on Monday. Spanish pensioners receive two cheques in summer and two over the Christmas holidays.

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

Record high unemployment, which hit over 27 percent in the first quarter, 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 euros, or 5.65 percent of gross domestic product, after the operation on Monday, the Ministry said.

(Reporting by Paul Day; Editing by Ruth Pitchford)

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