Pensions In Spain To Rise By 3.8% In 2024
Spain News
Published: 29 November 2023 17:29 CET
Contributory pensions in Spain are set to increase by 3.8 percent next year, aligning with the average inflation recorded over the past twelve months. The National Institute of Statistics (INE) released the Consumer Price Index (CPI) data for November, providing the final piece of information needed to determine the extent of the pension revaluation.
A 3.8 percent increase translates to a rise of approximately 45.5 euros per month in the average pension within the system. Currently, the average benefit stands at 1,198 euros per month over 14 payments. Specifically for retirements, the average benefit is expected to be revalued by 52 euros per month, increasing from the current 1,378 euros per month to 1,430 euros in the coming year. Anticipated growth in the number of individuals entering the system with higher pensions in 2024 is expected to contribute to a further increase in these averages.
The November CPI also sheds light on the maximum pension amount, linked to inflation. The maximum pension will see an increase from the current 3,059 euros per month over 14 payments to 3,175 euros next year, reflecting a boost of 116 euros. Similarly, the maximum contribution bases will rise from the current 4,495.5 euros to 4,720 in 2024. Any portion of a worker's salary exceeding this amount is exempt from contributions.
Non-contributory pensions, which do not necessitate contributions to Social Security, will experience a 6.8 percent increase in line with the reform approved by the Executive in March. This percentage increase will also be applicable to the minimum contributory pension and the minimum vital income.
As a result, the non-contributory individual retirement pension will reach 517 euros per month over 14 payments, an increase of 33 euros compared to 2023. The minimum vital income for an adult without dependents will rise to 604 euros per month over 12 payments, reflecting a 38-euro increase. The minimum contributory retirement pension with a dependent spouse will grow to 1,032 euros per month over 14 payments, an increase of 66 euros per month.
The government is expected to formalise these changes through a royal decree in December, coinciding with the finalisation of the November inflation data. Additionally, the Ministry of Inclusion, Social Security, and Migration typically sends a letter to pensioners in January, providing details on the adjusted benefits after the revaluation.
The overall increase in benefits, maximum pension, and contribution bases will be incorporated into the General State Budgets, where the government will outline the cost of the revaluation. Applying the scales used by the Bank of Spain, estimating a 1,800 million euro increase in spending for each point of inflation, the total cost of the revaluation is projected to be around 6,840 million euros.
Since December 2021, the law has safeguarded the purchasing power of pensioners, ensuring that benefits are consistently revalued with inflation. This protection was established in response to past instances, such as in 2011 when the government froze all pensions, except the minimum and non-contributory ones, as a cost-cutting measure during the financial crisis. In 2013, a mechanism was introduced, limiting revaluations to 0.25 percent during periods when Social Security experienced a deficit.
Source
https://www.20minutos.es/noticia/5194619/0/las-pensiones-subiran-un-3-8-2024-con-ipc-los-jubilados-ganaran-media-52-euros-mas-mes/
https://elpais.com/economia/2023-11-29/las-pensiones-aumentaran-un-38-en-2024.html
