Spain ends 2023 with a total of 10.1 million pensions paid to 9.2 million retirees. The social security system funds an average monthly allowance that, over the year, amounts to 12,120.8 euros in total, equating to about 11.5 percent of GDP. This snapshot comes from figures released by the Ministry on Tuesday, reflecting the state of the Spanish economy. If the planned 3.8 percent pension revaluation for January 1, 2024 is not implemented, the average monthly cost for the entire system would stay at around 1,198.7 euros across 14 payments.
Public spending on the pension system has risen in recent years. The growth is partly due to a larger retired population receiving social support, as roughly one in five Spaniards is retired. Those who are now retired typically earn about 1,398 euros per month, a level that is roughly 16 percent higher than what retirees already recognized by the system receive.
Nonetheless, the economy has recovered and expanded since the Covid-19 crisis, and the weight of pension spending relative to GDP has declined. In 2020, with an unprecedented economic contraction caused by lockdowns, Spain spent 12.4 percent of GDP on pensions. In the current period, spending stands at about 11.5 percent of GDP.
More liabilities and more income
The most recent pension reform, introduced under the previous minister Jose Luis Escrivá, increased the system’s obligations to retirees. For instance, benefits are aligned with annual inflation updates, a move that raises the average pension for the entire system from 1,198.7 euros today to about 1,244.2 euros per month starting next week.
As the population continues to age, costs are expected to rise. Today, Spain allocates 11.5 percent of GDP to pensions, up from 10.9 percent in 2019 before Covid and the reform. The reform package approved by the coalition government also adjusted the balance between contributions and benefits to strengthen the system. With a growing labor force contributing payroll taxes, more money flows into the Social Security fund. Current social contributions have risen by 9.7 percent, and when the Intergenerational Equality Mechanism is excluded, the rise would be about 8.1 percent due to higher contributions from both employers and workers.
At present, the public system disburses 10.1 million pensions each month to 9.2 million retirees. Some individuals receive more than one pension. The most common benefit is the standard pension, covering 6.3 million people. Among these recipients, 60.1 percent are men. In the case of the widow’s pension, 95.9 percent of the 1.5 million recipients who rely on it as their main benefit are women. Additionally, there are 941,281 permanent disablements, 323,140 orphans, and 44,891 family members who depend on related allowances.