[Spain] Social Security contributions will go up in 2023

Spanish Social Security contributions are on the rise. On November 16, Spain’s Minister of Inclusion and Social Security, Jose Luis Escriva, announced an agreement to raise social security contributions by 0.6 per cent between 2023 and 2032 in order to help pay for the pensions of an upcoming wave of retirees, Euro Weekly News reports.

The Spanish government - led by Pedro Sanchez - reached an agreement over the increase with the trade unions UGT and CCOO.

The 0.6 per cent rise in Spanish social security contributions will help boost Spain’s Social Security Reserve Fund. It will be a joint payment from employers, who will pay 0.5 per cent, and employees, who will add 0.1 per cent.

Escriva estimates that the increase in Spanish social security contributions of 0.6 per cent will raise €48 billion in the 10-year period 2023-2032.

The minister said, “The current state pension’s pool reached as high as €68 billion in 2012, but since then has been emptied and now stands at around €2 billion.

“The reform will come into force in a few months”, Escriva said, he stated that the rise in the taxes taken from employees’ salaries “won’t reach €2” for employees and will be “under €10” for companies.

Baby Boom

Spain experienced a baby boom during the final two decades of Franco’s dictatorship. It ended in 1975 and those babies are now due to retire in the next few years, putting the state’s finances under strain. According to 2021 statistics, there are 6.45 million citizens in Spain in the 55 to 64 age group and 9.37 million over the age of 65.

The scale of the increase in contributions - which will affect employees of all ages and income levels - had reportedly been a stumbling block in the three-way talks between the government, unions and businesses that have been ongoing for several weeks.

Earlier on Tuesday, the Spanish Confederation of Business Organisations (CEOE) and the Cepyme business association - respectively representing large and small companies - left the negotiating table, insisting that the plan placed too much burden on employers and would damage job creation.

Spanish Prime Minister Pedro Sanchez posted on Twitter, “We have reached an agreement to revalue and protect the public system, to protect the present and the future of our elders’.

Retirement age increase

From January 2022, Spain’s retirement age is expected to increase to 66 years and a couple of months, meaning that to get a full state pension a person must have worked for 37 years and 6 months.

By 2040 Spaniards are expected to live longer than the people of any other nation in the world. At 85.8 years, Spain offers one of the very best life expectancies.

Spanish Social Security contributions are on the rise. On November 16, Spain’s Minister of Inclusion and Social Security, Jose Luis Escriva, announced an agreement to raise social security contributions by 0.6 per cent between 2023 and 2032 in order to help pay for the pensions of an upcoming wave of retirees, Euro Weekly News reports.

The Spanish government - led by Pedro Sanchez - reached an agreement over the increase with the trade unions UGT and CCOO.

The 0.6 per cent rise in Spanish social security contributions will help boost Spain’s Social Security Reserve Fund. It will be a joint payment from employers, who will pay 0.5 per cent, and employees, who will add 0.1 per cent.

Escriva estimates that the increase in Spanish social security contributions of 0.6 per cent will raise €48 billion in the 10-year period 2023-2032.

The minister said, “The current state pension’s pool reached as high as €68 billion in 2012, but since then has been emptied and now stands at around €2 billion.

“The reform will come into force in a few months”, Escriva said, he stated that the rise in the taxes taken from employees’ salaries “won’t reach €2” for employees and will be “under €10” for companies.

Baby Boom

Spain experienced a baby boom during the final two decades of Franco’s dictatorship. It ended in 1975 and those babies are now due to retire in the next few years, putting the state’s finances under strain. According to 2021 statistics, there are 6.45 million citizens in Spain in the 55 to 64 age group and 9.37 million over the age of 65.

The scale of the increase in contributions - which will affect employees of all ages and income levels - had reportedly been a stumbling block in the three-way talks between the government, unions and businesses that have been ongoing for several weeks.

Earlier on Tuesday, the Spanish Confederation of Business Organisations (CEOE) and the Cepyme business association - respectively representing large and small companies - left the negotiating table, insisting that the plan placed too much burden on employers and would damage job creation.

Spanish Prime Minister Pedro Sanchez posted on Twitter, “We have reached an agreement to revalue and protect the public system, to protect the present and the future of our elders’.

Retirement age increase

From January 2022, Spain’s retirement age is expected to increase to 66 years and a couple of months, meaning that to get a full state pension a person must have worked for 37 years and 6 months.

By 2040 Spaniards are expected to live longer than the people of any other nation in the world. At 85.8 years, Spain offers one of the very best life expectancies.