Definitely confirmed, pensions will rise by 2.8% next year. After the INE published the advance inflation data for the month of November (+2.4%), Social Security communicated yesterday the level of the revaluation of the 10.2 million pensions and other benefits they receive the 9.2 million beneficiariesbased on the average CPI of the preceding twelve months – that is, between December 2023 and November 2024 – The result is that next year’s increase will be the third highest in the last eighteen years. Saving this year’s 3.8% increase and the historic 8.5% increase in pensions in 2023, we would have to go back to 2008 to observe a larger increase, then 4.1% – including the ‘ ‘paguillas’ that were paid later to compensate for deviations in inflation when the increases were made with the CPI of November of the previous year.
Precisely, to avoid this volatility regarding the adjustment needs of the increases carried out and to guarantee the maintenance of purchasing power of pensioners was introduced in the first part of the pension reform approved in 2021 by the previous Minister of Social Security, José Luis Escrivá, this formula that compensates in each year’s increase for the price increase of the previous one, although This means that temporary losses of purchasing power may occur if the revaluation is lower than the rate of increase in prices throughout the year. Loss that is compensated at the beginning of the next year by taking the inflation of the previous twelve months.
Financial pressure
What the tweak to the revaluation formula does not change is the rate of cost increase, especially accelerated in recent years, which this automatic indexation of pension revaluation with the CPI entails. This year’s 2.8% will add just over 5,000 million euros to the cost in pensions for 2025 on the total bill. According to estimates made by the Bank of Spain, the cost to the public coffers of each extra point increase applied to the pension payroll is estimated at 1,800 million euros. Therefore, the increases made in the last inflationary three-year period accumulate an additional cost of just over 27,000 million euros.
But the mammoth bill for contributory pensions – the minimum ones will rise more than the CPI –, non-contributory pensions and for civil servants, which will exceed 200,000 million euros in the whole of 2024, not only grows each year as a result of the updating of payments. To the 5,000 million cost of the increase, we must add the increase in spending generated by the upward slide between the pensions that are no longer paid and the new ones that enter the system, which on average are 25% higher. This effect has caused a disbursement of nearly 2.7 billion more per year in the last six years. So he extra expense accumulated on the current invoice would amount to above the 7 billion in 2025.
Evolution of inflation and
annual pension increases
Annual average CPI at the end of November
Revaluation of pensions
Fountain: INE and Social Security /ABC
Evolution of inflation and
annual pension increases
Annual average CPI at the end of November
Revaluation of pensions
Fountain: INE and Social Security /ABC
The impact of this concurrence, the rise with the CPI and the effect of replacing the pensions that are canceled with those that enter the system, has led to the monthly pension bill exceeding 12,000 million. In an extra month, like this November, the cost is double, assuming a disbursement equivalent to 1.6 percentage points of GDP. For example, in November, the pension new retirement stocking coming from the general regime for employees already amounted to 1,744 euros per month. This figure is a 8.6% higher than the average pensionretirement of the general regime – 20% higher than the average withdrawal, accounting for all regimes – and represents a 38% higher than the system’s average pension –counting all types and regimes–.
How much does each pension go up?
Of the 9.2 million pensioners, 6.5 million receive a pension benefit retirement. The average stands at 1,447 euros per month and will go to 1,487 euros per month in January (40.5 euros more per month and 567 more throughout the year). Among the retirees, those of general regime are the most numerous (4.8 million), with an average pension that will amount to 1,650 euros (45 euros more per month and 630 euros more in the year); the self-employed Retirees start receiving 992 euros from January (27 euros more per month and 378 for the year as a whole); the sea workers They will begin to receive 1,647 euros from January (45 euros more per month and 630 euros for the whole year); the workers of the mining will receive payments of 2,887 euros (78 euros more per month and 1,092 euros more for the year as a whole); retirees for accident will receive 1,561 euros (42 euros per month more and 588 a year); withdrawals for occupational disease will be updated to 1,967 euros per month (53 euros extra per month and 742 euros in the year).
The pensions of widowhood will amount to an average of 923 euros per month (25 euros per month more and 350 in the year); that of orphanhood goes up to 517 euros (14 euros more per month and 196 in the year). Those of permanent disability will be 1,196 euros per month on average (32 euros extra per month and 448 a year). While the pensions of Passive Classes, those of the officialswould rise to 2,313 euros per month (63 euros more per payroll and 882 annually).
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