The Government proposes to reform pensions by increasing the maximum contribution bases and charging high salaries
The Executive also proposes to be able to choose the computation period: keep 25 years or expand to 29, being able to remove two
The European Commission will evaluate the reform when Spain requests the fourth disbursement of the recovery fund
The pension reform that the Government has presented to the social agents includes a solidarity quota in the contributions of the highest salaries, doubling the intergenerational equity mechanism (MEI) and being able to choose between the current calculation period to calculate the pension or extend it.
Reform, agreed with Brussels and within the Government of coalition, is part of the milestones committed to unblock a new disbursement of European funds and focuses on ensuring the sustainability of the system with different measures to strengthen income.
Raising of the maximum bases
Among the measures to strengthen income, focused on high incomes, the increase in the maximum contribution bases stands out (currently at 4,495 euros), which will be between 2024 and 2050. This will consist of adding a fixed amount of 1.2 percentage points to the annual amount of the CPI.
For their part, the maximum pensions will be revalued year by year with the annual amount of the CPI plus an additional increase of 0.0115 cumulative percentage each year until 2050. From 2050 and until 2065, there will be additional increases.
solidarity fee
With the same objective of improving the income of the system, the Government has raised a “solidarity quota” for the part of the salary that is currently not listed due to exceeding the maximum contribution limit. This will be 1% in 2025 and will increase at a rate of 0.25 points per year until reaching 6% in 2045.
For example, to a person who earns 500 euros above the maximum contribution limit, the quota would only apply for those 500 euros and not for his entire salary, quoting an additional 5 euros in 2025. This quota will only apply to salaries greater than 53,946 euros in 2023, the maximum contribution base today in Spain.
Intergenerational equity mechanism
Also, to improve the income of the system, the Intergenerational Equity Mechanism or MEI will go from the current 0.6 percentage points to 1.2 percentage points in 2029 at a rate of one tenth of an increase per year to reinforce the system during the years in which there may be greater stress due to the retirement of the ‘baby boom’ generation.
Choice of the computation period on a dual model
A “dual regime of the computation period” is established for the next 20 years that will allow pensioners to choose between keep 25 years of contributions that are currently taken into account to calculate the initial pension or count 29 years being able to rule out twowhich leaves that period at 27 de facto years.
According to sources from the Ministry of Social Security, the new option to expand and discard will be deployed progressively over 12 years, starting in 2026, “with the aim of benefiting workers with irregular careers.”
The calculation period has been one of the main obstacles in the negotiation, since both the unions and Podemos were opposed to extending it.
Gaps coverage and gender gap
In order to try to make progress in reducing the gender gap in pensions, two measures are introduced.
To begin with, with respect to the coverage of periods without contributions, the called gapsit is maintained that contribution gaps are compensated with 100% of the minimum base for the first four years and with 50% of the minimum base from month 49 onwards.
To this is added, for employed women, 100% of the minimum base up to the fifth year and 80% of the minimum base from the fifth to the seventh year.
It is also stated that the gender gap plugin of pensions -currently set at 30.40 euros per month for each child- will have during 2024 and 2025 an increase of 10% in addition to the annual revaluation that is set according to the increase in pensions.
Improvement of minimum and non-contributory pensions
Counting on the extra income that the system will receive as a result of this reform, another of the objectives is to increase the amounts of the minimum pensions.
In this way, a path of convergence of the minimum contributory pensions will be established to ensure that they reach 60% of the median income, taking as a reference the evolution of the minimum pension with dependent spouse, which between 2024 and 2027 it would reach 60% of the median income corresponding to a household of two adults.
Likewise, a similar process is established for the evolution of non-contributory pensions, which would grow until converging in 2027 with 75% of the poverty threshold calculated for a single-person household.
Sánchez promises “progress policies” for the middle class
The President of the Government, Pedro Sánchez, has closed this Saturday the regional Municipal Convention in Huelva, where the first electoral video of the socialist campaign has been presented, and in which he has affirmed that “a decade of cuts and neoliberal response to the financial crisis, demand a decade of progress policies and advances in rights”.
“We need a decade of progressive politics and a decade of advances in rights to revert everything that the right dismantled”, he assured, after presenting the slogan of the campaign ‘Defend what you think’, in which he asked “to have more governments that defend what the majority thinks”.
In addition, the head of the Executive has defended the revaluation of pensions and the increase in salaries: “The decent salaries of today are the decent pensions of tomorrow.”
Echenique sees in the pension agreement an act of patriotism
The parliamentary spokesman for United We Can in the Congress of Deputies, Pablo Echenique, has stated that, for him, patriotism is “working to improve people’s lives, raising public health or agreements like the one we have reached on the reform of pensions”.
With this agreement, Echenique has considered that the pension system “will be sustainable and add 35,000 million euros more in the piggy bank every yeartouching only the contributions of those above and not lowering anyone’s pension”. “It is probably the most redistributive measure that we are going to take in the entire legislature,” he declared.
In this sense, he referred to the president of the CEOE, Antonio GaramendiAs the false autonomous irregular who earns 400,000 euros a year”, making ugly that he has considered that said measure will lead to the “economic apocalypse”. However, Echenique has settled: “This reinforces that it is a good agreement.”
Brussels will evaluate the reform when Spain requests payment
The European Commission has reiterated that it will evaluate the pension reform when Spain requests the fourth disbursement of the recovery fundto which it is linked, after the Government has announced an agreement on the reform that, it assures, has the approval of Brussels.
The spokesperson for the Community Executive for the Economy, Veerle Nuyts, when questioned about it, limited herself to pointing out that “there have been intense exchanges in recent weeks” with the Government on “the fiscal sustainability of the general pension reform package” , similar to what it has done with other Member States.
Los 10,000 million euros of the fourth tranche of direct aid from the recovery fund are subject to a positive assessment of four milestones Within the reform of the pension system: the adaptation of the maximum contribution base, the extension of the years for calculating the retirement pension, the implementation of the intergenerational equity mechanism and new projections that guarantee the sustainability of the long-term system.
