The Government foresees that the pension 'piggy bank' will grow by 63% in 2024 until closing the year with 9,000 million euros

The government’s forecast for this year is that the Social Security Reserve Fund will reach 9,000 million euros, according to the Minister of Inclusion, Social Security and Migration, Elma Saiz. The fund will continue to grow throughout 2024 and beyond, with the goal of exceeding 25,000 million euros at the end of the legislature. This growth is supported by the Intergenerational Equity Mechanism, which involves additional contributions from both employers and workers. The fund’s growth is seen as a positive sign of the strength of the pension system and provides confidence and certainty to citizens, according to Saiz.

The Intergenerational Equity Mechanism will continue to increase the contributions over the next few years, reaching 1.2% by 2029. This mechanism aims to reinforce the income of the pension system. The government projects that the fund will surpass 25,000 million euros by the end of the legislature, its highest level since 2015. It is worth noting that the reserve fund reached its peak in 2011 at 67 billion euros but has significantly decreased since then, hitting a low of 2,138 million euros in 2020.

While the fund’s growth is a positive development, pension spending has also increased, particularly due to the revaluation of payments with the CPI to maintain the purchasing power of pensioners. The pressure on the system will intensify in the coming years as the baby boom generation reaches retirement age. The minister emphasizes that the reserve fund will be an important resource to address temporary imbalances between income and expenses in Social Security.

Saiz also highlights the strength of the Spanish labor market, with over 530,000 jobs created in 2023, reaching a total of 20.8 million employed individuals. She states that there have never been so many people working in the country, with a ratio of 2.4 contributors per pensioner. Additionally, the minister highlights the importance of promoting partial retirement and working on a new regulation regarding the compatibility between work and pension. The aim is to encourage a gradual and voluntary exit from the labor market while addressing the issue of early retirement in challenging professions.