The final phase of pension reform, which José Luis Escrivá, Minister of Inclusion, Social Security and Immigration put on the social dialogue table this Friday, adds additional improvements while ensuring that there will be no cuts in benefits compared to the current situation. will be included in the next few years. Reform agreed by Escrivá with government partners United We Can and with European Commission increases a little spending level increasing pensions while significantly increasing the income that employers have to contribute through contributions and the so-called “solidarity surcharge”. According to the calculations of the Ministry of Social Security, a 25-year-old who retires in 2062 will receive about 20,000 euros more over the entire retirement period with the reform. A 60-year-old individual who retires in 2027 will increase his income by 5 thousand 300 euros with the reform. These some of the suggested changes This Friday will affect the amount of pensions and, if successful, will be added to those already approved by Parliament (such as pensions revalued by CPI):
calculation period
Workers may choose to calculate the basis of their pension from the calculation period that is most advantageous for them. Workers reaching retirement age with a stable working life will want to stay in the current system and take the last 25 years of their working life as a basis for calculating. For workers with a more interrupted work career, it may be more interesting for them to choose the new path offered by the reform that Escrivá agreed with United We Can: take the last 29 years of working life, but exclude the 24 worst months from the number of contributions.
minimum pension
According to the reform under negotiation, with or without contributions, retired creditors are likely to receive a higher amount on the horizon. The plan is to make the minimum contribution for people over 65 with a dependent spouse equivalent to 60% of the median income for a two adult household. And the non-contributory minimum is up to 75% of the median income of a one-person household. All this will have already been fulfilled in stages, but by the 2027 horizon.
maximum pension
The current maximum pension of 3,059.23 Euros will be subject to a small additional increase. The amount will be revalued year-over-year based on the CPI plus an additional 0.0115 percent cumulative increase each year through 2050. There will be additional increases from 2050 to 2065.
bid gaps
The current gap-closing model – understanding gaps as months of no obligation to pay contributions and taken into account in calculating pensions – is maintained and improved for women. From the beginning, it is essential that premium deficits are compensated at 100% of the minimum basis for the first 48 months. [4 años]and for female workers working with 50% of the minimum floor from the 49th month, additionally 100% of the minimum floor between the 49th and 60th months vacant [es decir, hasta el 5º año] and 80% of minimum base between 61 and 84 months [del 5º al 7º año].
gender complement
The gender gap supplement is for women, who contribute a fixed amount per child, except where the birth of the child affects the man’s work career. The reform proposes that in addition to the annual revaluation in the two years 2024-2025, the gender gap complement of pensions will have an increase of 10%.
Intergenerational Equality Mechanism
The MEI went into effect in January 2023 to save money in a piggy bank to meet the spending pressure that will come during the mass retirement of ‘baby boomers’, now aged 45 to 60. years old. The current 0.6 point salary contribution to the MEI is split between the company (0.5 points) and the worker (0.1 points). As expected, when the MEI rises to 1.2%, the payroll reduction will double to reach 0.2 points.