The Secretary of State for Social Security, Octavio Granado, announced on Thursday that the Government has sent a proposal to social agents so that pensions are reviewed every year with an indicator linked to an interannual CPI average of the last twelve months.
This mechanism, which would officially replace the current pension revaluation index from 2020 by which they rise 0.25% while Social Security has a deficit, will make pensions rise according to the CPI, but not the data of a month (before 0.25% the interannual CPI for November was taken), but the average of the last 12 months (from November of the current year on December from the previous year).
This update measure, according to the Secretary of State, will apply from next year and will have to be validated in the Cortes.
However, this average will be used this year (November 2018 on December 2017) to avoid the loss of purchasing power of pensioners and compensate the difference of the rise in pensions with the rise in the CPI. According to the Government, pensions this year rose by 1.6% and minimums by 3%.
However, with the new revaluation methodology, the average of November of this year on December last year is 1.7%, so that pensioners will be compensated with an increase of the pension of 0.1% additional, which will cost about 256 million euros for public coffers.
"There are two or three things that are clear: first of all, what we have to do next year, because this year we have neither the norm to enable it nor the possibility of accounting for an increase, although we do have money to pay for it," said Granado.
According to the Secretary of State, the new revaluation formula is the "fairest" as a "corrective" mechanism in the face of price deviation, since the average of the last twelve months and the November CPI tend to coincide, «Except in years when there is an erratic rise or fall in prices in October or November».
"This measure serves to cushion the excesses that may occur using a single monthly indicator," he added.