Today, The government approved an important reform in this legislature by royal decree: pensions. The Council of Ministers convened extraordinarily to introduce the new model, which is its main focus. Intergenerational Equality Mechanism (MEI)an innovation in reform that will affect wages.
Pension reform: all the keys
This pension reform bring changes in the calculation period Of these, it will now be calculated over the contributions of the last 25 years or over the contributions of the 29 years and exclude the worst two years. In practice, this means a calculation of 27 years in the latter case.
An important innovation in pension reform, Intergenerational Equality Mechanism (MEI)HE will directly affect fees from January 2023. This mechanism is a new tax approved in the first phase of the reform, which means a 0.6% increase in contributions for common contingencies and is distributed between employers and workers in similar proportions to the existing social contributions: 0.5% for the company and 0.1% for the worker.
HE MEI aims to maintain the balance between generations and strengthen the sustainability of the education system Social Security long-term. For this, an additional contribution is determined that, It will feed the Social Insurance Reserve Fund for ten yearsFrom 2023 to 2032.
The government expects these measures to increase revenue by 1.2% of GDP and amount to the equivalent of around 15,000 million euros. However, the gap created by the arrival of baby boom generations in the system awaits to be closed. It is estimated that total pension expenditures will reach 15% of GDP by 2050.
This Pension reform also foresees improvements in minimum pensions, with the aim that the minimum contribution pension is close to 60% of the median income. A similar process has also been established for non-contributory pensions, which will increase until they approach 75% of the poverty line for single-person households in 2027.
For address gender inequality in hostelsthe gender gap supplement will be increased by an additional 10% to the annual revaluation in the two-year period 2024-2025. In addition, improvements were made in closing the premium gaps for women.
To fund these improvements and avoid cuts, the Government negotiated with Brussels measures that increase revenue mainly through wages. Among them above the maximum contribution bases to earn more income from higher salaries from next year. Maximum pensions will be reassessed annually with the CPI. plus additional cumulative increase up to 2050.