May 11, 2021

Spending on pensions grows by 7%, the highest rate since 2008 | Economy

Spending on pensions grows by 7%, the highest rate since 2008 | Economy

Spending on pensions has skyrocketed in 2019. This January Social Security has allocated 9,535.5 million in paying contributory pensions. This represents a jump of 7.08% over the same month of the previous year, according to the Ministry of Labor. It is the biggest increase since December 2008, when the increase reached 8.5%.

This great increase comes, above all, from the decisions made last year on pensions: annual revaluation according to the CPI, increase in minimum pensions, unblocking the increase in the regulatory base for a large part of widows. All these decisions have led to an increase in the average pension of 5.72% in January, to 983.46 euros.

Updating pensions according to the CPI implies, just for this, a parallel increase in total spending on contributory pensions. In 2019, the increase was provisionally 1.6%. We will have to wait until the end of the year to know if we have to revise the increase and compensate it if finally this rise has fallen short because prices have risen more.

This is precisely what happened in 2018: benefits grew 1.6% and the final rise in the CPI was 1.7%. That tenth will be compensated in February and, therefore, that expense does not appear in the January payroll. But what is included is the additional expenditure that implies applying the 2019 increase on a larger calculation basis in 2018. That is, the 1.6% increase has been made taking into account which pension the retiree should have charged in 2018.

In addition, this increase applies only to part of the contributory pensions. The minimum, in fact, have a higher rise. For them, the increase is 3%. And finally, we must add the 56% rise to 60% of the regulatory base that is taken to calculate the pension of many widows.

All this leads to a significant jump in the average pension of 5.72%. And to that is added the increase in the number of pensions, a 1.29%, which leaves the total number at 9.695.870.

Most of the 9,535 million euros destined to pay the payroll of pensions in January went to retirement pensions, with 6,778.1 million euros (+ 7.2%), followed by widow's pensions, to which 1,670 million euros were dedicated (+ 8.7%).

According to Labor, a total of 414,050 people, of whom 98.9% are women, already benefit from the payroll this month of the rise in the regulatory base of the widow's pension from 56% to 60%.

To the payment of permanent disability pensions were allocated in January 926.5 million euros (+ 3.8%), orphanhood accounted for 136.1 million euros (+ 5.3%) and pensions in favor of relatives totaled 24.1 million euros (+ 8.4%).


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