Tenerife
-
-
-
Loading
Loading
Spain is often considered to be a country that is with generous pension payments, but it is not generally known that it is one of the few in Europe where retirement pensions are capped. At present pensioners can receive no more than 2,819 euros a month from the Social Security, which will increase to 3,059 euros a month in 2023.
Elsewhere this is not the case. Germany, Italy, Sweden, Portugal, and Denmark do not impose any limit on the maximum monthly payment, and in Luxembourg and Greece, which do, it is much higher at 9,192 euros and 4,606 euros a month respectively. This means that the highest pension payment in Spain is about 40% lower than in Greece, a less-developed country.
To receive the highest pension in Spain someone must have paid into the system for 37 years and six months, which will gradually increase to 38 years and six months by 2027. The Minister of Employment and Social Security, José Luis Escrivá, is also preparing a reform to the pension system which will make it harder to achieve the maximum pension.
With this, workers on high salaries will be those who lose out the most under the potential reforms. Those who earn more than 54,000 euros a year will end up paying the highest contributions over the next decades. The change will be introduced gradually until at least 2050 and will lead to an even bigger gap between the amount they pay in, and how much they receive when they retire.
In fact, from 2023 until at least 2032 all Social Security contributions will increase by 0.6% due to a new mechanism of intergenerational equity, which comes into force in January to refill the reserve pension fund and top-up retirement pensions of the so-called ‘baby boomers’.
This means that those on the highest incomes will see three increases in the amount they pay out in years to come: an increase in line with inflation, an extra 1.154% per year under the reforms which are currently being negotiated, and a further 0.6% for this new mechanism.
