And, above all, it significantly improves individuals' perception of this relationship, which may lead to incentives systems and their impact on agents' decisions in the labour market working more appropriately, reducing individuals' uncertainty over future income. In my address I have referred to the projections of various organisations on the sustainability of the system and to the reforms being applied in other European countries, summarising the content of the Research Department document that I shall send you this week. But let me conclude by highlighting the importance of the work entrusted to this Committee, especially at this current juncture where, for other reasons, economic agents are under a cloud of uncertainty. The agreement reached in Toledo whereby pension sustainability may not be used as a political battering ram is an achievement of which you should all be proud. This agreement, moreover, does not mean you should not react to the problems that may emerge in the pension system as a result of future demographic changes. On the contrary, the agreement obliges us all to examine the problems and seek solutions. I am sure you will be able to convey to the general public that these problems can be resolved if the appropriate  4  BIS Review 51/2009  measures are taken and that, moreover, if they are taken without delay, they need not be traumatic.
As you know, the Toledo Pact has already been in place for more than 13 years. Over that period demographic and, until recently, macroeconomic developments made for a significant improvement in the Social Security system's financial position. Since the signing of the Pact, the Spanish population has grown strongly by more than 6 million, most of whom immigrants. Immigration has been significant not only in terms of volume but also of its composition, insofar as it tends to be concentrated in the younger age groups. In parallel, macroeconomic developments enabled this strong growth in population to be absorbed by the labour market. Notable in this connection was not only the contribution of the foreign population but also the significant role played by female nationals progressively joining the labour market. These developments occurred against a background of very low growth in the number of pensioners as retirement was centred on the generations born during the Spanish Civil War and the post-war period. As a result, Social Security registrations far outgrew pensions in recent years, which explains how the Social Security system ran growing surpluses, rising to 1.3% of GDP in 2007. These surpluses were assigned, in part, to the Reserve Fund, which reached a significant size of close to 5% of GDP at the end of 2008. In the past year, however, the impact of the economic crisis has also been felt in the Social Security accounts, meaning there has been a rapid deterioration in this surplus, which could even disappear within a year.