The final figure is not closed, but it is already clear that the payrolls of pensioners will rise more than 2% next year, in line with the average inflation resulting from this exercise, which the Executive estimates could be around 2.3%. And the revaluation will be done in this way because this is reflected in the first part of the pension reform agreed between the Government and the social agents that Parliament is already processing. This rule establishes that the calculation base for the increase in the income of the elderly is the average inflation of the 12 months prior to November. That is to say, the average between December 2020 and November 2021.
The Budgets approved today do not include, therefore, this increase, since it will be necessary to wait to know the evolution of inflation to November of this year. The one that results at the end of the year is also the one that will determine, for its part, the amount of the “paguilla” that retirees will receive in early 2022 to compensate them for the loss of purchasing power, given that their incomes rose 0.9% at the end of the year and prices are already at 4%.
Compensatory pay in January
Thus, at the beginning of 2022, retirees will perceive the difference between the increase that was applied to them and the average inflation with which the year ends. In a scenario in which that average inflation will be around 2.5%, the extra payment would be the equivalent of 1.6 tenths, which would imply an additional expense of about 2.3 billion, which would be consolidated in lifetime retirements for next uploads. The invoice for the price deviation would therefore be 4,600 million, adding the increase and the consolidation. To this amount, in turn, the increase in January should be applied, which will once again be the average inflation of 2022.
Iprem grows 2.5%
What was revealed yesterday is the evolution that the minimum and non-contributory pensions, which will grow by 3%, the same percentage increase that will be applied to the Minimum Living Income, whose update is linked to the evolution of non-contributory pensions. This is how Minister María Jesús Montero has advanced. He stressed that the Budgets intend that the economic recovery after the pandemic is “fair” and reaches “the entire population.” For this reason, this greater increase for pensions of a smaller amount has stood out, as well as the rise in Iprem of 2.5%, an index that determines access and the amount of social aid and subsidies.
Pensions will again be the highest item in the Budget next year with 171,165 million euros, 4.8% more in aggregate terms compared to this year when it increased by 3%. Spending will continue to grow more each year taking into account the rise in the number of pensioners due to the incorporation of the ‘baby boom’ generation. Baby boomers will begin to retire in 2023 and after long trading careers. They were the first generation to go to university and took the most qualified jobs, which will give them the right to higher pensions at a time when the birth rate in Spain is languishing and precariousness is the tonic of the labor market.
Montero has also advanced that they will transfer € 4.4 billion additional for so-called “improper expenses“assumed by Social Security. That is, non-contributory items that up to now have been paid with social contributions and reduced the pension fund. This transfer of improper expenses is one of the measures included in the first block of the reform of Government pensions to clean up Social Security accounts, as well as incentives to delay the effective retirement age.