This 2023 state budget, approved in November 2022, includes a major change for civil servants and retirees: a CPI-based payroll update that translates to an 8.5% increase in pension contributions under the Social Security system, covering death and survivorship benefits, permanent disability, and retirement. Regarding pensions, the minimum vital income continues to rise through 2023, with a 5% increase applied from July 2022.
The decisions aim to support the national economy and reduce the loss of purchasing power, especially for lower-income households that are most affected by rising prices. These families, which often have little room to save and face unforeseen expenses or the basics of daily living, represent about 20 percent of citizens affected by inflation.
In addition to updating public revenue in line with CPI, other steps were taken to inject liquidity into households, including a 200€ check to bolster income in the current period.
Repayment to retirees
On March 16, authorities stated that efforts would expand pensioners’ rights, reduce the gender gap, and create a new sustainability framework for the public pension system. This includes approving the return of unjustly collected income from pensioners.
This circumstance affects retirees earning less than €5,365 annually and with an annual income below €11,200 who are not required to file an Income Tax return, who are exempt from paying for medicines. In total, about six million retirees fall into this category.
An error in the pharmaceutical contribution margin had caused some retirees to pay amounts they should not have owed for medicines. The General State Administration is preparing to rectify this by making repayments through the pensioner’s bank account over the next six months, with the repayment amount based on the actual spending on medications. This restoration is described in policy communications and will be administered by the social security system as it processes eligible credits for affected retirees. [Citation: Government of Spain, Budget 2023 overview]