Pension spending grows 11% compared to last year and now amounts to 12,000 million per month

Social Security already spends 12,051 million euros each month to pay the more than 10 million contributory pensions registered in the system. This is clear from the pension system statistics published this Tuesday by the Ministry of Inclusion, Social Security and Migration.

As of September 1, pension spending was 11% higher than what was recorded at this time last year. An increase that is due, for the most part, to the revaluation of benefits in accordance with the CPI, which during the year represented an increase of 8.4% in the pensioners' payroll.. To this we must add the increase in the number of pensions that has occurred since then – there are now 123,565 more – and the amount of benefit for the new additions is also higher than the system average.

Practically, three out of every four euros of spending in the system goes to cover retirements. The monthly payroll that the State pays in this concept already stands at 8,793 million euros, which places the average retirement pension at 1,376 euros per month in 14 payments (19,267 euros per year). An income that already exceeds the most common salary in Spain, which amounted to 18,502 euros per year in 2021 (latest data available).

In addition, the payroll received by new retirees who had registered in the system until August stands at 1,547 euros per month (21,656 per year), a figure practically tied to the median salary in Spain in 2021 (21,639 euros).. Of course, it is worth clarifying that the median salary – that which divides Spanish employees into two halves: those who earn more and those who earn less – is expected to have increased compared to the last two years.

However, behind these figures hides a very heterogeneous reality.. In 2022, 60% of pensioners received a benefit below the minimum interprofessional wage (1,080 euros per month in 14 payments), a proportion that in the case of retirements is reduced to 51%.. On the other side of the spectrum, there are 20% of retirees who receive a pension of more than 2,000 euros per month in 14 payments.

It is worth remembering that the 12,000 million expenses mentioned above include contributory pensions—those that require having contributed a minimum period of years to be able to receive them.. To know the total expenditure of the system, it would be necessary to incorporate the expenditure of the Passive Classes—those received primarily by military or civil servants—which represent another 1,474 million euros more per month.. In total, we are talking about 13,474 million euros in benefits.

Rising spending

Pensions already represent 41% of the expenditure included in the General State Budgets (PGE), classified by expenditure policy. A large figure that, for the most part, is covered by the social contributions paid by current workers.. However, since social contributions are not enough to pay all contributory benefits, the State must cover part of this deficit with transfers.. The Fedea study center recently estimated that in 2023 48,348 million euros of public money will be allocated to cover the imbalances in the system. Or what is the same, 3.6% of GDP.

Furthermore, the pension system has against it the factor of the aging of the population expected for the coming years.. Baby boomer retirement is imminent. This generational cohort is the largest in the pyramid and, in addition, their retirement is a challenge because they have had longer and better paid careers than their predecessors, especially women.

If nothing remedies it, pension spending will grow from 13.7% of current GDP (including Passive and non-contributory Classes) to 16.3% in 2049, according to Airef estimates.