Spain is not the only country losing sleep over the future of its pension system. Hundreds of miles away, all is not well in the once powerful, wealthy and influential Holy See. This was made crystal clear by Pope Francis, who at the end of November sent a letter to his cardinals in which he acknowledged that the Vatican Pension Fund faces a “serious imbalance” that threatens to worsen as time goes on. It warns: “The current system is not in a position to guarantee compliance with the pension obligation of future generations in the medium term.”

There are already those who say that the Vatican is on the verge of bankruptcy.

What happened? He recalls that Pope Francis sent a letter to all his cardinals to address an issue that had been the focus of their predecessors’ “concerns”: the Vatican Pension Fund. Bergoglio’s letter is not exactly designed to give good news on this subject. Rather, it aims to draw the attention of both the pontiff and society at large (the letter was published through the Vatican’s press service) to his fragile health and the dark clouds that lie ahead.

“With this letter, I would like to draw your attention to an issue that particularly concerns me today, because we are faced with serious and complex problems that risk getting worse if not addressed in a timely manner. I mean the management of our Pension Fund, Bergoglio said. “This issue has been addressed by successive pastors since its creation. “Since it is a ‘subject of interest’, it is already considered among the central issues of economic reform.”

What is a retirement fund? Essentially, the Vatican Pension Fund guarantees coverage of ecclesiastical, religious and lay personnel working in the Roman Curia, the Vatican City State and the institutions and organizations responsible for the administration of the Apostolic See. Its features and operation are reflected in a regulation compiled by the Church itself, which specifies coverage as well as insurance coverage for relatives of deceased personnel.

So what is your situation? The pope does not give numbers or go into detail in his letter, but he does mention a few ideas that suggest the fund is not at its best. The Holy See explains that, after various studies, it has concluded that the current pension management creates a “significant deficit” when considering their assets. Moreover, the latest inspections draw a horizon full of curves.

“Unfortunately, the current figure is […] It indicates a serious potential imbalance in the Fund, the magnitude of which tends to increase over time in the absence of intervention. In practical terms, this means that the current system cannot guarantee in the medium term the fulfillment of the pension obligation for future generations,” concludes Francisco, who is “fully aware” of the need to adopt “urgent structural measures” and which the Vatican cannot postpone if it wants to guarantee the “sustainability” of the Pension Fund .

What measures? The letter again does not include the amount or description of specific measures, but Francis assumes that these will not be “easy decisions” and asks for “special sensitivity, generosity and willingness to sacrifice” from his bishops. What showed the development was the decision to appoint 77-year-old Irish Cardinal Kevin Farrell as the sole administrator of the Pension Fund. Thanking those who have taken responsibility for the box so far, Bergoglio advocated moving towards “a new phase that is the key to stability and prosperity” of society.

Is it something new? Bergoglio’s letter is like that. In fact, it attracted the attention of media outlets such as Reuters or Associated Press (AP), as well as specialized websites such as the official portal of the Vatican, Vatican News or Digital Religion. The co-founder of the latter, Jesús Bastante, a few days ago signed an article on elDiario.es in which he spoke directly about how the Vatican is “on the verge of bankruptcy” and pointed to the letter signed by the Pope as evidence of the seriousness of the situation.

Rumors about the fragile health of the Pension Fund are no longer so new. A similar situation (outside its current scope) arose in 2015, when Fund managers responded to what they considered “alarming” news and assured that there was a “substantial balance” between resources and subsidy commitments. Both those of the moment and those to come. More precisely, they said that the fund was covered by 95 percent and that measures such as increasing the retirement age and premiums were taken.

What was the situation then? At the time, managers assured that they expected the fund to exceed €500 million by the end of the same year; this was well above the five million euros in 1993.

In any case, his remarks came after Cardinal George Pell, one of the heavyweights of Vatican finances, publicly acknowledged that he was looking with concern at the fund’s long-term future. His estimate was that the stock market had sufficient funding for ten or fifteen years, but needed to be strengthened for future generations.

What is a financial statement? In September, Bergoglio sent another economic letter to his cardinals, asking “for everyone to do more to ensure that ‘zero deficit’ is not just a theoretical goal.” In his article, the Supreme Pope drew attention to the reforms carried out and talked about the importance of seeking “outside resources” and “cost reduction”.

Specialist website Pillar Catholic interpreted this as a sign that the Vatican still faces financial pressures despite measures such as hiring freezes, salary cuts or increasing rents for Roman cardinals.

Shortly after, in October this year, Reuters reported that the Vatican had decided to cut the salaries of bishops who head the main offices governing the Church in Rome by about 10%. There were precedents for this. Francisco had already ordered another reduction in 2021.

What challenges do you face? A lot. Italian newspaper in July Republic It revealed that the Vatican recorded an operating deficit of 83 million euros in 2023, five million more than the previous year. The newspaper also underlined that the outlook is not very promising for the Church, given the decline in donations from the faithful in the medium term.

In June, the Vatican’s official channel, Vatican News, highlighted that donations to St. Peter’s Pence had increased by almost five million euros to 48.4 million, although the media reported a much higher volume of total expenditures. The data on the structure of the church and the age of priests are devastating: in 2009 the average age of priests in Spain was over 63; This figure was already around 65.5 in 2018. There are provinces where more than half of the priests exceed the retirement age.

Pictures | Fátima Flores (Flickr), Church in Valladolid (Flickr) and Long Thiên (Flickr)

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