PENSIONERS in Spain have seen their retirement benefits surge by a third since 2018 – dramatically outpacing wage growth across the nation.
New data released by Spain’s Social Security system reveals that while working Spaniards have seen their salaries rise by 25% over the past six years, retirees have enjoyed a 33% increase in their monthly payments.
Accordingly, the average pension has now jumped from €1,107 in 2018 to €1,450 per month in 2024.
It paints a stark contrast with the slower growth in workers’ wages, which have only climbed from an average of €1,748 to €2,181 monthly.
The surge in pension payments is putting unprecedented pressure on Spain’s social security system, with experts warning of a growing deficit.
The system closed 2023 with a shortfall exceeding €50 billion, according to calculations by the Foundation for Applied Economics Studies (Fedea).
Adding to the financial strain, newly retiring workers are entering the system with significantly higher pensions than their predecessors.
Last November, new retirees received an average of €1,548 monthly – 16% more than those who retired in the same month of 2018.
The number of pensioners has also increased by 9.2% since 2018, yet pension spending has grown four times faster.
The situation is particularly critical as Spain faces the imminent mass retirement of its baby boomer generation, the largest demographic group in the country’s history.
This demographic shift threatens to further strain the system as the workforce supporting it through contributions continues to shrink.
READ MORE: Reservoirs in Spain are 5% fuller than a year ago following autumn downpours
The Spanish government has attempted to address these challenges through reforms, such as increasing social security contributions, particularly for higher earners, and introducing incentives for workers to voluntarily delay their retirement.
However, Spain’s Independent Authority for Fiscal Responsibility (AIReF) is set to audit these measures this year, with many experts anticipating that they won’t be enough to balance the books.
Without new agreements, the system could face automatic increases in social security contributions, potentially driving up labor costs across the Spanish economy.
The growing disparity between pension payments and wages highlights the broader challenge Spain faces as it grapples with an aging population and the sustainable funding of its pension system in the decades ahead.
Click here to read more Business & Finance News from The Olive Press.
