By Lisa Zeffertt •
Updated: 17 Jul 2023 • 9:40
Pension pot - Image One Photo / Shutterstock.com
IN 2023, the government made changes to pensions in an attempt to compensate for the increase in inflation and geopolitical events. In January, the Social Security contributory pensions were revalued to 8.5 per cent to mitigate the effects of rising inflation, while the 15 per cent increase in non-contributory pensions was extended after the impact of the war in Ukraine on the Spanish economy.
What about 2024? Will we see an increase in retirement pensions? In March, the Royal Decree-Law 2/2023 was published, issuing “urgent measures” to increase the rights of pensioners, reduce the gender gap and establish a new sustainability framework for the public pension system.
Currently, the total cost of pensions in Spain is 11,997.2 million euros, in June 2023, a 10.76 per cent increase on the previous year. Spain is an ageing country with an imbalance of workers to pensioners. Half of the 17 autonomous communities in Spain have a ratio of under two workers per pensioner this year, when the optimal proportion is three. This leads to an unbalanced deficit, with stagnant salaries failing to compensate for pensions that are rising to meet the increasing costs of living caused by high inflation.
One of the major contributing factors that is exacerbating the situation is the large-scale retirement of those from the “baby boomer” generation, while for the younger workers of Spain, multiple global crises, stagnant wages, precarious work contracts, high levels of unemployment have affected their ability to find work and contribute to the social security system.
Pensions are forecasted to rise again in January 2024, to help protect the purchasing power of pensioners to guarantee that the minimum contributory pensions “reach 60 per cent of the median income in Spain by 2027, with a progressive calendar of increase between 2024 and 2027”, as cited on the BBVA retirement portal. Likewise, “non-contributory pensions will increase until they reach 75 per cent of the poverty threshold for a single-person household by 2027.” This measure will reduce the existing gap of 20 per cent and in a bid to address the gender gap, a 10 per cent increase will be introduced.
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Lisa is British, born in Hong Kong and has lived in many countries including the UK, Hong Kong,
Cyprus, and Thailand, Spain has been her home for the past 10 years.
After graduating with a BA in English Literature and Art History, she has worked in different
sectors, most recently as a ghostwriter and translator for six years
Writing is one of her passions, as well as working in both Spanish (fluent) and English.
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