Each pensioner, on average, charges 1.74 euros for each euro listed. This is clear from an article on financial profitability of pensions prepared by Bank of Spain. A publication that assimilates retirement benefits to a financial investment, using data from 7,627 people who accessed it in 2017. The sample is restricted to the General Scheme and the Self-Employed, excluding those partial retirements that are combined with a job at the same weather.
These 1.74 euros would be the average that each pensioner would receive, based on the unit pension cost (CPU). But the analysis varies depending on the type of retirement. The ordinary ones would receive 2.03 euros; the partial, 1.89 euros; those voluntarily delayed, 1.74 euros; and the anticipated ones, 1.39 euros. “It should be noted that, in terms of CPU, the system would grant, on average, around 1.7 euros of benefit for each euro contributed, again there being a significant dispersion throughout the distribution and by type of pension,” he acknowledges the document in its conclusions.
Likewise, the Bank of Spain measures profitability through the internal rate of return (IRR). Another way of calculating for which you get an expected annual return. Under this assumption there are also notable differences by types of retirement.
The average annual profitability would be at 3.5% for the whole system. In the case of ordinary pensions, the data amounts to 4.11%; in those related to partial retirement, 3.9%; in those voluntarily delayed, 3.69%; and in advance, 2.8%. Both using CPU and IRR, the latter are the worst performers in terms of financial performance.
“By type of pension, early retirements would be associated with a lower return than ordinary retirements, while partial and voluntarily delayed retirements would obtain returns similar to the latter or somewhat lower,” the study explains.