The National Institute of Statistics (INE) has released the final CPI data for November, which serves as the reference point for the automatic pension revaluations in 2023. Pensions and the minimum living income are set to rise by 8.5% next year, reflecting one-tenth of the forecast. General state budgets are aligned with this adjustment. The increase takes effect on January 1, 2023, and retirees will see updated tables in this month’s payroll. The increase in contributory retirement benefits will be 8.5%, the most common increase for retirees who currently number about 10 million. The CPI throughout 2022 underpins this adjustment.
In 2023, the country implements the second year of the new formula for automatic annual pension revaluations. This formula was agreed by the Minister of Inclusion and Social Security, José Luis Escrivá, with employers and unions. It results from averaging inflation between December of the previous year and November of the current year, yielding an 8.5% adjustment for the next calculation period. Concretely, if the average pension stands at €1,141.63 (per the October payroll), it will rise to around €1,238.70 by January, marking an approximately €97 increase. For survivor pensions, temporary disability, or orphanhood, all contributory pensions will increase by the same proportion.
Minimum pensions will also rise by 8.5 percent
Currently, the minimum non-contributory pension is €484.61 per month. Following an extraordinary agreement with the political party EH Bildu to boost these subsidies by 15%, this extraordinary increase is extended into 2023. The government has extended the measure for next year, so minimum non-contributory pensions remain at €484.61 per month in 2023. Approximately 428,000 people in Spain receive some form of non-contributory pension, whether at the minimum level or for disability. On the higher end, the maximum contributory pension can reach €3,059.20 per month. Accordingly, the maximum base for contributions will rise by 8.5% in line with the pensions.
There will be no ‘Paguilla’
Unlike last year, where the pension revaluation followed the average CPI of the previous year, the 2023 regulations establish a second consecutive year of validity without the traditional compensatory payment known as a ‘paguilla’ for the transition between computation schemes. Last year, pensions rose by 0.9% at the start of the year relative to expected inflation for the year, while the twelve-month average inflation later showed a higher figure. From now on, traditional paguillas are being phased out of payrolls, and the adjusted system is designed to avoid such abrupt one-off supplements.