South Europe's families offer short-term fix to pensions crisis

By Julien Toyer & Lisa Jucca

When Angel Gomez and Maria Luisa Fernandez retired a decade ago, they imagined spending their pensions largely on restaurant meals, holidays and toys for the grandkids. Today, their retirement money helps to support five families.

The Spanish couple, like other relatively prosperous pensioners across southern Europe, are providing an informal safety net which has helped many in the younger generation to avoid widespread poverty despite record-high unemployment.

"I never thought I would have to spend part of my pension to help my kids," said 79-year-old Angel, who worked for 35 years as an administrative clerk at the Bank of Spain. "I am proud of it, but I'm a little worried for them."

In much of southern Europe, pensions have been the most stable type of income during the past five years of economic hardship. In Spain, they rose 8.3 percent between 2008 and 2012, government statistics show. By contrast, incomes of people aged 30-44 - the biggest group in the working-age population - fell 2.8 percent as millions lost their jobs or took wage cuts.

Angel and his wife are typical beneficiaries. Their combined monthly pension of 3,600 euros ($4,900) is almost double the average income of Spanish households, which is about 2,050 euros. It's proven enough to help their four middle-aged children and their families.

While the couple enjoy a stable income, their children lead insecure lives that are common for the younger generation even when they have work.

Their son David, 40, fears he'll lose his job as a keyboard teacher when his state music school goes into private ownership later this year. His wife Raquel, 39, must reduce her hours as an administrative officer because her...

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