Spain is not the only one that is losing sleep over pensions. The Vatican fund is on the verge of bankruptcy

Spain is not the only one that lose sleep for the future of its pension system. Hundreds of miles away, in the once powerful, wealthy, influential Holy See, things are not much better. This has just been recognized with crystal clarity by Pope Francis, who at the end of November sent a letter to his cardinals in which he recognizes that the Vatican Pension Fund faces a “serious imbalance” that threatens to worsen with the passage of time, and warns: “The current system is not in a position to guarantee compliance with the pension obligation for future generations in the medium term.”

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

What has happened? That Pope Francis has sent to all his cardinals a letter to address an issue that, he recalls, has been a focus of “concerns” for his predecessors: the Vatican Pension Fund. And Bergoglio’s letter is not exactly designed to convey good news in this regard. Rather, it seeks to draw the attention of both the curia and society in general (the letter was disseminated through the press service of the Holy See) about his delicate health and the dark clouds that are approaching.

“With this letter I intend to draw your attention today to an issue that particularly interests me, since we are facing serious and complex problems that risk getting worse if they are not addressed in time. I am referring to the management of our Pension Fund , already considered among the central issues of economic reform, for having been the object of ‘concern’ of successive pontiffs since its creation”, starts Bergoglio.

What is the pension fund? Basically, the Vatican Pension Fund guarantees coverage of the ecclesiastical, religious and lay personnel, who work in the Roman Curia, the Vatican City State and the organizations and entities in charge of managing the Apostolic See. Its characteristics and operation are reflected in a regulation collected by the Church itself in which it talks about coverage also for the relatives of deceased personnel.

And what is your situation? In your letter The Pope does not provide figures or go into detail, but he does drop a few ideas that indicate that the fund is not going through its best moment. After carrying out several studies – explains the Supreme Pontiff – the Holy See has come to the conclusion that the current management of pensions, taking into account their assets, generates “a significant deficit”. What’s more, the most recent audits draw a horizon with curves.

“Unfortunately the figure that is now emerging […] indicates a serious prospective 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 is incapable of guaranteeing in the medium term the fulfillment of the pension obligation for future generations,” concludes Francisco, “fully aware” of the need to adopt “urgent structural measures” and that the The Vatican cannot postpone if it wants to guarantee “the sustainability” of the Pension Fund.

What measures? Again, the letter does not quantify or reveal specific measures, but in it Francisco assumes that they will not be “easy decisions” and asks his prelates for “a special sensitivity, generosity and willingness to sacrifice.” What does advance is his decision to name the Cardinal Kevin Farrella 77-year-old Irishman, as sole administrator of the Pension Fund. After thanking those who have been in charge of the box until now, Bergoglio advocates moving towards a “new phase, key to the stability and well-being” of the community.

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

What is no longer so new is the rumor about the delicate health of the Pension Fund. Something similar—without the current scope—occurred in 2015when the administrators of the Fund came out in response to what they considered “alarmist” news and assured that there was “a substantial balance” between resources and subsidy commitments. Both those of that moment and those to come. To be more precise, they talked about the bottom being covered by 95% and that measures had been taken, such as increasing the retirement age and contributions.

What was the situation then? The administrators assured at that time that they expected the fund to exceed the 500 million euros at the end of that same year, considerably above the five million in 1993.

His statements came in any case after a heavy weight in the Vatican’s finances, the Cardinal George Pellpublicly acknowledged that he viewed the long-term future of the box with concern. His prediction was that the stock market had enough financing for a decade or a decade and a half, but that it would need to be strengthened for future generations.

What is the financial picture? In September Bergoglio sent another letter in an economic key to his cardinals in which he asked for “a greater effort on the part of everyone so that the ‘zero deficit’ is not just a theoretical objective.” In your writingthe Supreme Pontiff highlighted the reforms carried out and spoke of the importance of seeking “external resources” and “cost reduction.”

The specialized website Pillar Catholic He interpreted it as a sign that, despite the measures activated by the Vatican, with hiring freezes, salary cuts or rent increases for Roman cardinals, the Holy See still faces financial pressures.

Not long after, in october This year, Reuters reported that the Vatican had decided to cut the salaries of prelates in charge of the main offices that run the Church in Rome by around 10%. There were precedents. In 2021 Francis had already ordered another discount.

What challenges do you face? Several. In July the Italian newspaper The Republic revealed that in 2023 the Vatican recorded an operating deficit of 83 million euros, five million more than the previous year. The diary gave a glimpse Furthermore, the prospects were not especially rosy for the Church, given the decline in donations from the faithful in the medium term.

In June Vatican News, the official channel of the Vatican, stood out that donations to the Saint Peter’s Pence had increased by almost five million euros, rising to 48.4 million, although the media speaks of a significantly higher volume of total expenses. Regarding the composition of the Church and the age of its curia, the data are devastating: in 2009 the average age of priests in Spain was above the 63 yearsa figure that in 2018 was already around 65.5. There are provinces where more than half of priests exceed retirement age.

Images | Fatima Flores (Flickr), Church in Valladolid (Flickr) and Long Thien (Flickr)

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