The Government estimates that pensions will rise above 3.5% in 2024, which would increase spending by 6 billion

Pensions will be revalued above 3.5% in 2024, a figure that, if materialized, would mean an additional cost to public coffers of around 6,000 million additional euros next year. Asked how much benefits will increase next year, Social Security sources place the revaluation in a range between 3.5 and 4.5%, depending on the inflation data for October and November.

It is worth remembering that the revaluation of pensions for 2024 is the result of the average of the interannual inflation data recorded between November 2022 and November 2023. With two months left, the average CPI rise is now at 3.6%. If Funcas' forecasts are met, which foresees inflation rising to 4.1% in October and rising to 4.6% in November, the final revaluation would reach 3.8%.. The aforementioned sources point out that the variations that occur in these two months “cannot be very large”, although they clarify that the geopolitical situation makes it difficult to predict what will happen in the coming weeks.

If these forecasts materialize, the revaluation for 2024 will be considerably lower than that approved this year, in which pensions rose by 8.4% driven by unprecedented inflation in four decades.. This 3.5-4% is in line with the salary increase that public employees will receive (up to a maximum of 3.5%) and is also aligned with the salary agreement reached between employers and unions to update private salaries. .

If we applied this hypothetical 4.5% increase to an average retirement pension (currently standing at 1,376 euros in 14 payments), the revaluation would mean an income of 48 euros more per month. Or what is the same, 672 euros per year.

Sustainability linked to full employment

The revaluation of pensions in accordance with the CPI is one of the key points of the reform of the system that the Government concluded this Tuesday after publicly presenting the projections of public spending linked to it. In an extensive 189-page document, the Executive justifies with numbers the sustainability of the reform agreed with the European Commission. A forecast that is optimistic compared to that of organizations such as Airef (the independent fiscal authority), which already stated in March that the reform worsens the sustainability of the system by increasing spending.

The Executive proposes a scenario in which the economy would grow at a rate of 2% annually between 2023 and 2050, with a reduction in the unemployment rate as has never been seen in the recent history of Spain.. The Government believes that the country's unemployment rate will fall by half in 20 years, going from 11.7% today to 6% in the 1940s.

In addition, he is confident that around 80% of people of working age will be employed at the times when the system will be most under pressure, starting in 2041.. Likewise, the Executive assumes that the productivity of the Spanish economy will improve in the coming years as the recovery plan is deployed.

“We have a labor market that has definitely changed. “In a short time we will be at unemployment levels that match our surrounding countries,” reflect the aforementioned sources, who emphasize that this will translate into an improvement in the income obtained from social contributions.. “The macroeconomic and demographic assumptions we use are reasonable. We are not starting from a picture full of fantasies, it is perfectly achievable,” these sources add.

If the Government's predictions come true, pension spending compensated by the income measures that have been adopted to shore up the system would average 12.4% of GDP over the next thirty years.. In principle, this threshold would be sufficient to not exceed the maximum of 13.4% allowed by Brussels, which is why the Executive considers that the automatic adjustment mechanism in case of deviations in spending will not have to be applied.