Spanish Social Security contributions to increase

Spanish Social Security contributions to increase

Spanish Social Security contributions to increase Image Pixabay

Spanish Social Security contributions to increase. Spain’s Minister of Inclusion and Social Security, Jose Luis Escriva, announced on Monday, November 16. That the Spanish government led by Pedro Sanchez, came to an agreement with the trade unions UGT and CCOO  to raise social security contributions by 0.6% between 2023 and 2032 in order to help pay for the pensions of an upcoming wave of retirees. 

The 0.6% rise in Spanish social security contributions will help boost Spain’s Social Security Reserve Fund will be a joint payment from the employers, who will pay 0.5%, and the employees, who will add 0.1%.

Escriva estimates that the increase in Spanish social security contributions of 0.6% will raise €48 billion in the 10-year period 2023-2032.

The minister said, “the current state pension’s pool reached as high as €68 billion in 2012, but since then has been emptied and now stands at around €2 billion”.

“The reform will come into force in a few months”, Escriva said, stressing that the rise within the taxes taken from employees’ salaries ‘won’t reach €2’ for employees and ‘under €10’ for companies.

Baby Boom

During the final two decades of Franco’s dictatorship, Spain experienced a baby boom. This ended in 1675, those babies are now due to retire in the next few years which will put the state’s finances under strain. According to 2021 statistics, there are 6.45 million citizens in Spain within the 55 to 64 age group, and 9.37 million above the age of 65.

The scale of the increase in contributions, which will affect employees of all ages and income levels, had been a stumbling block in the three-way talks between the government, unions and businesses that have been going on for several weeks.

Earlier on Monday the Spanish Confederation of Business Organisations (CEOE) and the Cepyme business association, respectively representing large and small companies, abandoned the negotiating table, arguing that the plan placed too much burden on employers and would damage job creation.

Spanish Prime Minister Pedro Sanchez posted on Twitter that ‘we have reached an agreement to revalue and protect the public system, to protect the present and the future of our elders’.

Retirement age increase

From January 2022, Spain’s retirement age is expected to increase to 66 years and a couple of months, meaning that to get a full state pension a person must have worked for 37 years and 6 months.

By 2040 Spaniards are expected to live longer than any other nation in the world, at 85.8 years. Spain offers one of the very best life expectancies in Spain

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