Increase in the maximum contribution bases and other main measures of the pension reform

MADRID, 10 Mar.

Increase in the maximum contribution bases and other main measures of the pension reform


The Ministry of Social Security has presented to the social agents its proposal for the reform of the pension system, previously agreed with Unidas Podemos and the European Commission. The main objective of these measures is to increase the collection of the State to face the expense that the pension system supposes and to be able to guarantee the increase of the benefits according to inflation.

Thus, among the novelties is increasing the maximum contribution bases or raising the Intergenerational Equity Mechanism (MEI). Next, all the keys to the reform.

Among the measures to strengthen income, focused on high incomes, the increase in the maximum contribution bases (currently at 4,495 euros) stands out, which will take place between 2024 and 2050. This will consist of adding to the annual amount of the CPI a fixed amount of 1.2 percentage points.

For their part, the maximum pensions will be revalued year by year with the annual amount of the CPI plus an additional increase of 0.0115 cumulative percentages each year until 2050. From 2050 to 2065 there will be additional increases.

With the same objective of improving the income of the system, the Government has proposed a "solidarity quota" for the part of the salary that is currently not listed due to exceeding the maximum contribution limit. This will be 1% in 2025 and will increase at a rate of 0.25 points per year until it reaches 6% in 2045.

For example, to a person who earns 500 euros above the maximum contribution limit, the quota would only apply for those 500 euros and not for his entire salary, quoting an additional 5 euros in 2025. This quota will only apply to salaries greater than 53,946 euros in 2023, the maximum contribution base today in Spain.

Also, to improve the system's income, the Intergenerational Equity Mechanism or MEI will go from the current 0.6 percentage points to 1.2 percentage points in 2029, at a rate of one tenth increase per year to reinforce the system during the years in which there may be greater tension due to the retirement of the 'baby boom' generation.

Another of the most important measures of this reform to modernize the pension system is the possibility of choosing the period for calculating the pension. And it is that for the next 20 years a dual regime of the computation period will be established, which will allow choosing between these two possibilities: the last 29 years of the career, discarding the 2 worst years; and the current computation period (last 25 years).

The first possibility will be deployed progressively over 12 years from 2026. The main objective of this standard will be to benefit workers with irregular and precarious careers.

Contribution gaps refer to the periods in which the worker contributes less to the system due to breaks in the work career, and there is already a model to cover them. However, this block of measures aims to improve it, especially by focusing on women and their greater tendency to opt for reduced working hours or part-time shifts to deal with, for example, caring for dependent people.

In this way, it is maintained that contribution gaps are compensated with 100% of the minimum base for the first 48 months [4 years], and with 50% of the minimum base from month 49, adding for working women employed by others, 100% of the minimum base between the empty month 49 and 60 [that is, up to the 5th year] and 80% of the minimum base between the 61st and 84th month [from the 5th to the 7th year ].

The reform also contemplates measures to combat the gender gap, focused especially on women, who on average always receive a lower pension than men, except in the case of widowhood. Thus, the gender gap complement of pensions will have an increase of 10%, in addition to the annual revaluation, in the 2024-2025 biennium.

Counting on the extra income that the system will receive as a result of this reform, another of the objectives is to increase the amounts of the minimum pensions. In this way, a path of convergence of the minimum contributory pensions will be established to ensure that they reach 60% of the median income, taking as a reference the evolution of the minimum pension with a dependent spouse, which would reach 60% between 2024 and 2027. of the median income corresponding to a household of two adults.

Likewise, a similar process is established for the evolution of non-contributory pensions, which would grow until converging in 2027 with 75% of the poverty threshold calculated for a single-person household.