The Council of Ministers approves the revaluation of contributory benefits to 8.5% as of January 1
The pension average of the new retired has fallen by 0.7% in the last year, to an average of €1,378.65 gross per month This is confirmed by the data updated this Tuesday by the Social Security, which ends in 2022, paying contributory benefits to a total of 9.94 million people throughout Spain. The decrease in the average amount of the new benefits may be due to various reasons, such as the fact that workers who retire today do so with worst salariesthat they do so with more discontinuous professional careers or that accelerate their abandonment of the labor market despite the penalties contemplated by law in their future pension.
Social Security, to pay for these almost 10 million monthly pensions -and despite the slight decrease in the average amount of the new payments- has had to allocate in December the record number of 10,943 million euros, 6.15% more than in the same month last year. In this balance of expenses and income of Social Security, the latter via social contributions They are also rising and they do so at a higher rate than spending, specifically at 8.5%.
The Ministry that directs Jose Luis Escriva estimates that pension spending is currently at 11.7% of GDP Spanish, a percentage that has remained stable in recent months and is expected to increase progressively over the next three decades, as a result of the gradual retirement of the generation of ‘baby boom‘ -more numerous than the preceding and following ones-.
This pension-GDP ratio will already experience an increase from January 2023, when the revaluation of pensions of 8.5% will come into force, based on the average CPI of the last 12 months and as established by law. This same Tuesday the Council of Ministers has approved the royal decree that gives the green light to said revaluation. Also the extension of the increase in fifteen% for the non-contributory pensions.
Applying said revaluation to the new contributory benefits that Social Security is recognizing, that pension that today is 1,378.65 euros will become from next month of €1,495.8 gross per month If the new pensions and those already being received by current retirees and other people covered by Social Security are added, the average pension in Spain stands at €1,094.87 gross per month, barely 0.07% higher than a year ago.
In other words, a retiree, on average, currently receives a pension higher than the interprofessional minimum wage (SMI), of 1,000 euros gross per month (in 14 payments). And a new retiree receives the equivalent of 76.7% of the average salary in Spain, which in 2020 -the latest data available from the INE- was 1,797.5 gross euros per month (in 14 payments). To pay for these benefits there is currently an average of two active workers for each pensioner.
pending reform
In order to cushion the impacts that this progressive retirement of the ‘baby boomers’ will have on the viability of the pension system -this worker/pensioner ratio will weaken-, the Government is finalizing reforms. The current bloc is still negotiating it with employers and unions and will not be able to approve it before December 31 of this year, as promised to the European Comission.
The main lines of the present pension reform that Escrivá intends is in line with increasing the contributions of large companies to the public treasury and thus bringing more money to the public treasury. He also intends to extend the computation period used to calculate future benefits, raising from the current last 25 years of the career to the last 30 years, with the possibility of discarding the two worst.
This last measure, according to Escrivá, will not bring more money nor will it increase spending for the Social Security coffers. Its objective is to improve the benefits of the most precarious workers and slightly reduce that of employees with more stable professional careers.
77,000 more pensioners in one year
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Between January and November, public employees of the Social Security have processed a total of 315,804 retirement files and 138,058 of widowhood. The average resolution of these files has been 21.80 days in the case of retirement and 19.77 days in widow’s pensions. These new registrations, crossed with the cancellations due to death, leave a balance of 77,870 more pensioners of the contributory regime in the last year.
As of December 1, 388,235 pensioners have received the gender gap supplement, of which 92.6% are women (359,365). The average monthly amount of this pension supplement is 61.2 euros. Of the 388,235 supplemented pensions, 21.8% correspond to pensioners with one child (84,599), who previously did not have access to the maternity supplement.