Rise in pensions with the ipc in 2023 and how they have risen in recent years
The Government In the few weeks remaining before the end of the year, it will have to address the last phase of the pension reform, the most difficult and controversial, and which includes the increase in the calculation periodfrom the current 25 years, a measure that could be effective in reducing spending but on which the Ministry of Inclusion, Social Security and Migrations that he directs Jose Luis Escriva has given few clues. Almost in parallel, pensioners will enjoy from next January an increase in their payroll of at least 8.5%, a rise questioned by various organizations and that leaves the system mortgaged for the future, and that without the Sustainability Factor and only with small modifications in the calculation period, it will be difficult to control the expense.
Up to 65% of the increase in spending on pensions with respect to Gross Domestic Product (GDP) It will come in 2050 from the increase in benefits according to the CPI, as highlighted in a recent report by the Bank of Spain, and it is that these increases will be consolidated in the following years, which will cause a very important extra burden beyond the entry of pensioners of the ‘baby boom’ generation, with high benefits generated by high salaries and long contribution careers. The future situation already has a preview, even with minimal inflation, in the last decade, with significant increases in the payments of pensioners for different supplements and for the ‘small’ revaluation of pensions.
Thus, while the number of retirees from all schemes has gone from 5.34 million in September 2012, in 2022 there are already 6.26 million, 17% more. Meanwhile, their pension payroll has gone from just over 5,000 million to 7,871 million in September of this year, the latest data available; 55% more. For its part, the number of retirees of the General Scheme have increased by 31%, compared to 65% who have made their 14 payments. Including all pensions -disability, widowhood, retirement-, the monthly bill reaches 10,867 million compared to 7,444 a decade ago, an increase of 46% that contrasts with that of beneficiaries, of just 11%.
How much does the revaluation of pensions increase spending?
The Bank of Spain estimates that each additional point of the CPI represents an extra cost of 1,800 million euros, which will mean next year a extra spending of 15,300 million, which will also be consolidated in the following years. Despite everything, up to a third of Spaniards welcome a revaluation of pensions according to the Index of Consumer Prices (CPI) to guarantee purchasing power, according to a survey carried out by KPMG in almost 500 companies from all sectors. Meanwhile, another third advocates limiting the increase to minimum and non-contributory pensions and limiting it to the rest, and the rest considers that caps should be imposed on increases, the truth is that the planned system will entail an enormous economic burden with contrary context.
The challenges of the public pension system
The Spanish public pension system will face in the coming years an unfavorable context derived from the access to retirement of the ‘baby boom’ generation, birth rates that do not allow replacement and an increase in life expectancy, which makes Spain in the longest-lived country in the world and that will substantially increase the time during which the pension is collected. The other front is the wages of the workers and the contributions, necessary to maintain the pensioners. In the second quarter of the year, the number of active employees amounted to 23.3 million people, of whom 20.5 were employed and 2.9 million unemployed, placing the unemployment rate at 12.48%, still too high to maintain the system.
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