Pension reform
As of 1-4-2023, RDL 2/2023, which includes modifications related to the pension system, among which the following stand out:
Increase in the maximum contribution ceiling
It will be updated by the same percentage by which Social Security contributory pensions are revalued. However, from 2024 to 2050, a revaluation percentage consisting of a fixed annual amount of 1.2 percentage points will be added to the maximum ceiling approved through successive LPGEs.
Additional solidarity quote
With effect from 1-1-2025, an additional solidarity contribution is established for remuneration exceeding the amount of the maximum contribution base for employees. The maximum amount of remuneration to which the additional solidarity contribution will be applied will be established according to the following brackets:
- Between the maximum base and the maximum base + 10%: 5.5%.
- Between the maximum base +10% and the maximum base +50%: +6%.
- Between the maximum base +50% and upwards: 7%.
The additional contribution, which does not count towards benefits, will be applied progressively from 2025 until 2045 when it will be set at the above percentages. The applicable scale is as follows:
| Up to 10 % additional | From 10 % additional up to 50 % additional | More than 50 % additional |
| 0,92 | 1 | 1,17 |
| 1,15 | 1,25 | 1,46 |
| 1,38 | 1,5 | 1,75 |
| 1,60 | 1,75 | 2,04 |
| 1,83 | 2 | 2,33 |
| 2,06 | 2,25 | 2,63 |
| 2,29 | 2,5 | 2,92 |
| 2,52 | 2,75 | 3,21 |
| 2,75 | 3 | 3,50 |
| 2,98 | 3,25 | 3,79 |
| 3,21 | 3,5 | 4,08 |
| 3,44 | 3,75 | 4,38 |
| 3,67 | 4 | 4,67 |
| 3,90 | 4,25 | 4,96 |
Intergenerational equity mechanism
It consists of a final contribution applicable in all cases in which contributions are paid for the contingency of retirement. It does not count for the purposes of benefits, nor can it be subject to any rebate, reduction, exemption or deduction or be reduced by the application of corrective coefficients or any other formula that reduces the contribution.
In the case of employees, the amount will be progressively increased to a percentage of 1.2% applicable to the contribution base: 1% applicable to the company and 0.2% to the employee. During 2023, it is set at 0.50% payable by the company and 0.10% payable by the worker.
Importe de las pensiones
- It is guaranteed that, from 1-1-2024, the annual revaluation of all contributory pensions, both maximum and minimum, will be carried out according to the average annual variation of the CPI, including the amount of the gender gap supplement.
- From 1-1-2025, the revaluation of pensions whose initial amount is limited by the amount of the maximum pension will be carried out by applying a percentage equivalent to the year-on-year change in the CPI. Successive revaluations will be carried out on the total amount resulting from the previous year’s revaluation.
- Through successive LPGEs, the maximum amount of pensions accrued from 2025 onwards will be subject to a revaluation percentage increased by 0.115 cumulative percentage points each year until 2050. From 2051 onwards, the additional annual increase applicable (%) will be as set out in the following table:
| 2051 | 2052 | 2053 | 2054 | 2055 | 2056 | 2057 | 2058 |
| 3,2 | 3,6 | 4,1 | 4,8 | 5,5 | 6,4 | 7,4 | 8,5 |
| 2059 | 2060 | 2061 | 2062 | 2063 | 2064 | 2065 | From now on |
| 9,8 | 11,2 | 12,7 | 14,3 | 16,1 | 18 | 20 | (*) |
(*) The opportunity for the additional increase to reach 30% is assessed.
With regard to the amount of minimum pensions, it is established that
- Contributory retirement pension for the over-65s and IPA with a dependent spouse. From 2027, the amount cannot be less than the poverty threshold calculated for a two-adult household. This will be obtained by applying a coefficient of 1.5 to the poverty threshold corresponding to a single-person household in the terms specified for Spain in the latest available data from the INE’s Living Conditions Survey, updated to the corresponding year in accordance with the average year-on-year growth of that income over the last 8 years. The application of this measure will entail a progressive increase in the minimum pension, which will be carried out according to the following scale:
- Year 2024: increase needed to reduce the existing gap by 20%.
- Year 2025: increase needed to reduce the existing gap by 30%.
- Year 2026: increase needed to reduce the existing gap by 50%.
- Year 2027: increase needed to reach the poverty line calculated for a two-adult household.
- Widow’s or widower’s pension with family responsibilities, contributory pension with a dependent spouse, except IPT for those under 60 years of age, will be increased by the same percentage.
- Other contributory pensions, once revalued, will be additionally increased each year and in the same period by a percentage equivalent to 50% of the previous percentages.
- Non-contributory pensions: once revalued, they will be additionally increased each year but with the reference of multiplying the poverty threshold of a single-person household by 0.75.
Calculation of the retirement pension
With effect from 1-1-2026, the method of calculating the regulatory base of the retirement pension is modified, as it will be the quotient resulting from dividing 378/324 (previously 350/300). Also, for the calculation period, a new feature is the possibility of choosing between the contributions corresponding to the 29 years prior to the month before the qualifying event (348 months) and, of these, the 324 months with the highest amount (25 years) will be chosen ex officio.
A progressive period is established for the application of this new method of calculation, starting in 2026 and ending in 2038, when it will be applied in full. From 1-1-2026, it will be the result of dividing 352.33/302, the latter within the period of 304 months immediately prior to the causal event.
The rules prior to the reform will coexist with the new regulation, in application of the following rules, depending on the date on which the event giving rise to the pension occurs:
- Between 31-12-2025 and 31-12-2040: the regulation prior to the amendment will apply if it is more favourable.
- During 2041: the legislation prior to the amendment will apply, with a regulatory base comprising the contribution bases for the last 306 months out of 357 if this is more favourable.
- During 2042: the legislation prior to the amendment shall apply, with a regulatory base comprising the contribution bases of the last 312 months out of 364, whichever is more favourable.
- During 2043: the legislation prior to the amendment shall apply, with a regulatory base comprising the contribution bases of the last 318 months out of 371, whichever is more favourable.
- From 2044 onwards: the new legislation applies.
Gender gap
During the period 2024-2025, the amount of the gender gap supplement is increased by an additional 10% on the expected revaluation to be distributed between both years as established in the corresponding LPG of each year.
As long as the gender gap is greater than 5% when calculating the retirement pension of employed women when there are periods in which there has been no obligation to contribute, from the 49th to the 60th monthly payment they will be integrated with 100% of the minimum contribution base and from the 61st to the 84th monthly payment with 80% of the same. The same rules apply in the case of men, provided that they can prove that their contribution career has been affected in relation to any of their children.
If you have any queries regarding this issue, please do not hesitate to contact us, by telephone to Isabel Torre Carazo or by e-mail to itc@btsasociados.com, we will be delighted to help you.