The final stage of the pension reform proposed by José Luis Escrivá, the Minister of Inclusion, Social Security and Immigration, was placed on the social dialogue table this Friday. The plan adds further improvements while ensuring there will be no reductions in benefits compared to the current framework. Over the coming years, the reform, agreed with government partners United We Can and with the European Commission, slightly raises expenditure on pensions while increasing the share that employers must contribute through social contributions and the so-called solidarity surcharge. According to the Ministry of Social Security, a 25-year-old who retires in 2062 would gain roughly 20,000 euros more over the entire retirement period thanks to the reform. A 60-year-old who retires in 2027 would see an income increase of about 5,300 euros. These are among the changes being proposed this Friday and would affect pension amounts, in addition to those already approved by Parliament such as CPI-indexed pension revaluations.
calculation period
Workers can choose the basis for calculating their pension from the period that best suits them. Those who reach retirement age with a stable career will likely stay with the current system and use the last 25 years of work to determine the pension. For those with more interruptions in their working life, the reform offers a new option: use the last 29 years of employment but exclude the 24 worst months from contributions.
The government will allow a choice between 25 or 29 annual calculations for pensions.
minimum pension
Under the reform under negotiation, retirees with or without contributions will likely see higher payments on the horizon. The plan aims to set the minimum contribution for individuals over 65 with a dependent spouse at 60% of the median income for a two-adult household. The non-contributory minimum would reach up to 75% of the median income for a single-person household. The goal is to implement these measures in stages, reaching the 2027 horizon.
How will the new pension reform affect companies?
The changes are expected to influence employer costs and corporate planning, with steps to modernize contribution rules and safeguard benefits for workers.
maximum pension
The current cap on pensions, around 3,059.23 euros, will receive a modest uplift. Revaluations will occur year by year based on the consumer price index plus a small cumulative increase of 0.0115 percent through 2050, with further increases anticipated from 2050 to 2065.
bid gaps
The existing model for closing gaps—months with no contribution obligations considered in pension calculations—will stay in place and be improved, particularly for women. From the outset, premium deficits should be addressed at 100% of the minimum contribution base for the first 48 months. For female workers with lower initial contributions, 100% of the minimum base applies from the 49th month onward, and 80% of the minimum base applies between the 61st and 84th months.
Pension reform pressures employers to improve benefits
The reform also aims to narrow the gender gap. The gender gap supplement for women, which applies a fixed amount per child in most cases, would receive a 10% increase in addition to the annual revaluation during 2024–2025. The intent is to provide steadier progress in pension equality.
Intergenerational Equality Mechanism
The MEI, in effect since January 2023, acts as a savings buffer to address the spending pressures from mass retirement among the baby boom generation, now aged 45 to 60. The current MEI contribution rate of 0.6% is split between the employer and the worker (0.5% and 0.1% respectively). As anticipated, when the MEI rises to 1.2%, the payroll relief will double to reach 0.2%.