As 2024 unfolds, workers in Spain confront a clear economic shift: the Intergenerational Equality Mechanism, commonly called MEI, often referred to as the pension tax. This adjustment is crucial for the long-term viability of the Social Security retirement system and raises several questions about who must contribute to the plan.
MEI is designed to shore up the retirement framework by addressing the pressures of an aging population and a large cohort of Baby Boomers approaching or entering retirement. In essence, it supplants the older sustainability factor and mirrors a precautionary step backed by the Social Security Reserve Fund. The central question remains: who will contribute to MEI in Spain?
Under Article 127 of the General Social Security Law, MEI does not apply only to employees in the General Regime. The measure also covers groups such as self-employed workers, domestic workers, and those employed in agriculture. Even individuals under a Special Social Security Agreement who contribute toward retirement are not exempt from MEI.
The financial footprint of MEI in 2024 is notable: a 0.7% rise in payroll taxes for all workers, irrespective of age or salary. The split allocates 0.58% to the employer and 0.12% to the employee.
The MEI posted in the Official State Bulletin started at 0.6% in 2023 and will ascend gradually each year through 2050. The mechanism is intended as a safety valve for the system until 2032, preserving the balance of contributions between employers and workers.
MEI represents a meaningful challenge for Spain’s workforce. As the country moves into a new phase of intergenerational equity in the pension framework, workers should prepare for these changes and understand their implications for daily life. With MEI in place, Spain is taking a decisive step toward pension system sustainability and the well‑being of future generations.
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The MEI is presented as a straightforward tax, yet it represents a collective effort to keep the system benefits shared. While it may feel like an extra burden in the near term, it functions as an investment in Spain’s long-term social fabric, ensuring pensions stay fair and solid for those who follow.