Spain | Pensions in 2023: news and forecasts

Summary

The main developments this year are the 8.5% revaluation of pensions in accordance with average monthly inflation from November 2021 to 2022 and the 15% increase in non-contributory pensions.

Key points

• Key points:
• By increasing the tax deficit of the contributive pension system to be financed with a higher tax burden, this decision has redistributive effects that transfer the cost of imported inflation to other agents (workers, companies and taxpayers in general). This makes it difficult to reach an ‘income pact’ and raises the risk of a price, wage and margin spiral.
• Other changes applicable in 2023 that could increase inflationary pressures are the 6-tenths increase in contributions, due to the application of the ‘intergenerational fairness mechanism’ (Spanish MEI) and the 8.5% increase in the maximum contribution base.
• In addition, there is a proposal to raise the maximum contribution bases above inflation for the next decades, without a proportional increase in the maximum pension.
• Another key new feature is the entry into force of the new contribution system for self-employed workers based on actual income, with 15 contribution brackets and up to 6 variations in contribution bases throughout the year.
• In 2023, we need to keep an eye on whether Law 12/2022 boosts occupational pension plans and whether it offsets the loss of savings in individual plans following the reduction of their deductibility for personal income tax.

Geographies

Topics

Tags