The great change that Minister José Luis Escrivá had to carry out in his plans to reform pensions was when he came to the conclusion that neither Podemos nor the unions were going to accept the extension of the calculation period, even if it was with conditions, and He dedicated himself to looking for alternative formulas. He certainly found them, through the coexistence for no less than two decades of the two systems: the current one of 25 years and the new one of 29 years suppressing the last two years. But this has a price. The reform was no longer neutral and new income had to be found. Escrivá balances it with three new sources of contributions, which tax social contributions and especially those with higher incomes, and with a security mechanism that will be activated automatically if spending soars.
The three new forms of income are the uncapping of maximum pensions, the reinforcement of the Intergenerational Equity Mechanism (MEI) and the solidarity quota for salary brackets that exceed the maximum contribution ceiling. When all these measures are fully deployed, the Government calculates that Social Security will collect 15,000 million euros each year. The objective is to cover a pension expense that will increase, both due to the arrival of the baby boom generation at retirement, and due to the new benefits incorporated, such as the increase in minimum pensions, the greater complement of the gender gap and The best coverage of the gaps in professional careers.
If pension spending now accounts for 12% of GDP, this percentage is expected to increase until it reaches 15%. This is where the new system, in addition to the new sources of income, adds a security mechanism that will increase income automatically if certain limits are crossed. That is, it will increase the MEI prices.
In the document that was delivered to the social agents on Friday, and to which La Vanguardia has had access, it is indicated that the Independent Authority for Fiscal Responsibility (Airef), as of March 2025, will evaluate every three years the average annual impact of the measures adopted as a percentage of GDP. To do so, it will take as a reference the latest Aging Report published by the European Commission. “If the average annual impact of the income measures is equal to 1.7% of GDP, Airef will verify that the average public spending on pensions in the period 2022-2050 of the last aging report does not exceed 15% of GDP” , says the proposal. Airef will do the same exercise if the impact is higher or lower than 1.7%.
From the Airef report, alarms can be activated if deviations have been detected. The first alarm leads the Government to act to correct the problem “through an increase in contributions or another alternative formula to increase income or a reduction in pension spending as a percentage of GDP or a combination of both measures”.
However, if the Government does not act in time, the second alarm, an automatic mechanism, would come into operation. “The contribution of the Intergenerational Equity Mechanism will increase to compensate two tenths of the excess estimated by Airef as of January 1 of the publication of the Airef Report and another two tenths in each of the following years until they are adopted. new measures of the same impact or the excess of net spending is corrected”, says the proposal.
Once Escrivá’s plans were known, the employer’s criticism was resounding, accusing the Government of “collection voracity” for the increase in social contributions, which basically fall on companies. In the case of the MEI, of the 1.2% contribution that it expects to reach, 1 point corresponds to companies and two tenths to workers. For what corresponds to the solidarity quota, of the 6% that it will finally have, 5% is borne by the company and 1% by the worker.
However, Escrivá rejects that there will be any loss of competitiveness. His argument is that when the measures are fully deployed, in 2050, they will mean less than 40 cents per hour worked “and prices will continue to be well below the euro zone average.”
