Saturday, October 1

How much do pensions go up in 2022 with the new reform?

The first stage of the pension reform agreed between the Government and the social agents comes into force this Saturday, January 1, after passing the corresponding parliamentary procedure in recent weeks. The standard recovers the CPI as a reference to revalue the benefits, promotes the delay in retirement and marks the end of the so-called sustainability factor, which has never come into effect. With this law, the revised text of the General Social Security law is modified and the main recommendations of the Toledo Pact are collected in autumn 2020, which are also integrated into component 30 of the Recovery Plan. As a consequence of the modification of the legal framework, contributory pensions will rise by 2.5% this year based on the formula contemplated in the pension reform and which takes into account the IPC to avoid loss of purchasing power. Specifically, this 2.5% increase is the result of the average CPI between December 2020 and November 2021. Pensions for passive classes will also rise by 2.5% this year.

However, the increase will be 3% for the beneficiaries of minimum pensions, non-contributory pensions and Minimum Living Income (The guaranteed income for the family unit made up of an adult will be 5,899.6 euros). For its part, the salary of civil servants will increase by 2% and the Public Indicator of Income with Multiple Effects (Iprem), a reference for the granting of scholarships, aid, unemployment benefit and subsidies, will increase by 2.5%, up to the 579.02 euros per month (6,948.30 euros per year in 12 payments).

With the rise of 2.5% contemplated for this year, the minimum contributory pensions will increase approximately between 10 and 59 euros per month, depending on the type of pension and personal circumstances. Specifically, the amount of the minimum pension for 65-year-old retirees with a dependent spouse will remain at 890.5 euros per month in 14 payments (compared to the current 851 euros per month); that of without a spouse (one-person economic unit) at 721.7 euros (currently 689.7 euros), and that of with a non-dependent spouse at 685 euros per month (compared to the current 654.6 euros).


For the retired with less than 65 years, the minimum pension with a dependent spouse is set for 2022 at 834.9 euros per month (797.9 euros currently); without a spouse at 675.2 euros per month (645.3 euros now), and with a non-dependent spouse at 638.2 euros per month (609.9 euros currently). For its part, the maximum retirement pension will be from today at 2,819.19 euros per month for fourteen payments, compared to 2,750.42 euros per month this year.

The minimum widowhood pensions they will go up between 24 and 37 euros per month, depending on the circumstances. Specifically, the minimum widow’s pension for holders with family dependents will be 834.9 euros per month, in contrast to the current 797.9 euros per month. In the case of being over 65 or having a disability greater than or equal to 65%, the minimum widow’s pension will be 721.7 euros per month, which is 32 euros more than now.

If the holder of the widow’s pension is between 60 and 64 years old, the amount with the new year will be 675.2 euros per month (645.3 euros currently), while in the case of beneficiaries under 60 years of age the benefit It will be 546.8 euros per month (522.5 euros this year).

For its part, the minimum contributory pension for severe disability will rise from this Saturday to 1,335.8 euros per month (1,276.5 euros currently) if you have a dependent spouse, and will rise to 1,082.6 euros if you do not have a charge to the spouse (one-person economic unit), in contrast to the current 1,034.6 euros per month.

The minimum pension for absolute or total disability of holders with 65 years with a dependent spouse will be 890.5 euros per month next year, in contrast to the current 851 euros, while that of those who do not have a dependent spouse (unit economic single person) will be 721.7 euros per month (689.7 euros currently).

In the case of orphan’s pensions, the minimum amount will rise from this Saturday to 220.7 euros per month per beneficiary (now they are 210.8 euros), while if the beneficiary is under 18 years old and has a greater disability or equal to 65%, the amount will be 434 euros per month, 19.3 euros more than in 2021. The minimum pension in favor of family members will be 220.7 euros per month in the new year, compared to 210.8 euros today. In addition, in the second half of this month, pensioners and beneficiaries of the Minimum Living Income (IMV) will receive a compensatory pay since their pensions were revalued by 0.9% in 2021, below the CPI.


In the parliamentary processing of the reform, the wording of the so-called Intergenerational Equity Mechanism (MEI) was introduced, included in the agreement signed with the social agents and finalized this fall with the unions (the business organizations did not support its final wording). The MEI has two components. The first consists of reactivating the Social Security Reserve Fund through a finalist contribution between 2023 and 2032. The contribution will be 0.6 percentage points of the contribution for common contingencies (0.5 points for the company and 0.1 points the worker) in order to act as a “safety valve” of the system from 2033. In the event that there is no deviation from the planned spending path, no measure will be applied and the use of resources will be considered from the reserve fund to reduce social contributions or improve the amount of pensions.

In the event that as of 2033 a deviation of the forecast of pension spending in 2050 is seen in the Aging Reports of the European Commission with respect to the 2024 report (which will be used as a reference), this Fund will be used, with an annual disposal limit of 0.2% of the Gross Domestic Product (GDP). If the disposition of assets from the Reserve Fund is not sufficient, the Government will negotiate with the social partners for their elevation to the Toledo Pact, in accordance with their recommendations, a proposal that, in a balanced way, is well aimed at reducing the percentage of pension spending in terms of GDP, either to increase the contribution rate or other alternative formulas to increase income

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Regarding the strengthening of the income structure of the system, the norm establishes that the Law of General State Budgets will contemplate annually a transfer from the State to the Social Security budget for the financing of various concepts that allow to complete the separation of sources in compliance with the 1st recommendation of the Toledo Pact of 2020. Said transfer was already included in the General State Budgets of 2021 and is expanded in those of 2022. In addition, in compliance with the 8th recommendation of the Toledo Pact, the Law refers to the creation of the State Social Security Agency, with the commitment to present a bill within six months, among other points.

For its part, the so-called ‘safeguard clause’ is maintained in its current regulation indefinitely, while forced retirement clauses for workers under 68 years of age are prohibited from the entry into force of the reform. In previously signed agreements, these clauses may be applied up to three years after the end of the initial term agreed for the agreement. In addition, if these clauses are established in the agreements, companies will have to hire at least one full-time and indefinitely one worker for each forced retiree.

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