Spain’s pension system enters 2023 with a new automatic revaluation formula and a clear path for basic and contributory benefits. The National Institute of Statistics, INE, has confirmed the latest CPI data, used to set pension adjustments for the coming year. The key takeaway is a broad 8.5 percent increase across most pensions, as well as a similar uplift for minimum and non-contributory payments. These changes take effect from January 1, 2023, and come with updated payrolls that reflect the new tables used by social security authorities. The 8.5 percent rise applies to the standard contributory pensions that are currently received by about ten million people, based on the inflation figures recorded over 2022.
In 2023, the automatic annual revaluation continues for contributory pensions, a framework agreed by the Minister of Inclusion and Social Security, José Luis Escrivá, together with employers and unions. The calculation hinges on the average inflation from December of the prior year to November of the current year. The result is an 8.5 percent adjustment for the coming period. Contributory pensions, including those for widowhood, temporary disability, or orphanhood, will all increase in the same proportion. For example, if the average pension is 1,141.63 euros according to the October payroll, it would rise to about 1,238.70 euros in January, a roughly 97 euro increase.
Minimum pensions will also rise by 8.5 percent
The minimum non-contributory pension stands at 484.61 euros per month and will rise next year depending on how the CPI finishes the year. This adjustment is expected to occur in 2023, aligned with the estimated 8.5 percent rate. The new level would be around 525.80 euros per month as of January 1, 2023. Approximately 428,000 people in Spain presently receive some form of non-contributory pension, whether at the minimum level or due to disability. On the other end of the spectrum, the maximum contributory pension can reach up to 3,059.20 euros per month. Consequently, the maximum base for contributions will also increase by about 8.5 percent in line with the pension upgrades.
There will be no “paguilla”
Last year introduced a transitional adjustment, the compensatory “paguila,” to bridge the gap between one calculation method and another. This year’s rules extend that approach by applying the new twelve-month average inflation to determine the pension increases, effectively phasing out the traditional paguillas from payrolls. The change aligns with a second consecutive year of stability for pension revaluations in 2023, reducing the need for ad hoc adjustments and providing a predictable path for benefactors. The outcome is a more straightforward and transparent method for updating pensions year after year, removing the surprise adjustments that once appeared on monthly payslips. The goal is to maintain purchasing power for retirees while simplifying the system for administrators and beneficiaries alike. [Source: INE]