Monday, January 24

Pensions will rise to 112 euros / month due to the CPI in 2022

The star measure of the pension reform consists of adjusting the revaluation of benefits to the evolution of the CPI. It will mean an increase in maximum pensions of 112 euros per month, to 2,819 euros, while the minimum pensions will increase to 40 euros, and will reach 890 euros per month.

These amounts are derived from the advance data on interannual inflation for November published by the INE, which will be confirmed in mid-December. According to him, contributory pensions will increase 2.5 percent in 2022, while the minimum and non-contributory ones will be revalued by 3 percent.

The last ‘paguilla’

Before this revaluation is applied for 2022, pensioners will receive a payment, known as a ‘paguilla’, to compensate for the deviation of 1.6 percent between the 0.9 percent that the pensions were revalued at the beginning of 2021 and the 2.5 percent that finally the average inflation has risen in the last 12 months.

If the effect of the pay is taken into account, pensions in 2022 will rise in total by 4.1 percent, except for the minimum pensions that will increase by 4.6 percent.

The pay to be paid in January it will be the last one received by retirees, due to the change in the method of revaluation of pensions.

Maximum pension of 2,819

Under the new model, the maximum pension next year will be 39,474 euros per year, which will be paid in 14 payments of 2,819.58 euros per month.

Therefore, the maximum pensions in 2022 will rise 1,570 euros per year, which means about 112 euros per month.

The increase comes from the 2.5 percent revaluation based on the CPI, plus the 1.6 percent update of the 2021 pensions for the compensatory pay, “which is accumulated to the pension amount already collected in 2021, and on that accumulated 2.5 percent revaluation is applied for 2022 “, point out sources from the BBVA Pensions Institute.

Minimum pensions of 890 euros

The revaluation of the minimum contributory pensions is not linked to the CPI. They will be revalued in 2022 by 3 percent, like the non-contributory ones.

The 3 percent revaluation will be applied to the amount of the 2021 pension, once the amount of the compensatory pay has been added to it.

Therefore, “minimum pensions, in practice, will rise 4.6 percent, which represents a 3 percent revaluation plus a 1.6 percent previous update, due to the difference between the 2.5 percent average inflation between December 2020 and November 2021, and the revaluation that was applied to these pensions at at the beginning of the year, 0.9 percent ”, indicate sources from the BBVA Pensions Institute.

In the case of a pensioner aged 65 or over with a dependent spouse, the minimum pension will be 12,467.76 euros yearly, 890 euros per month, which is 40 euros more. In case of having a spouse who is not dependent on them, it will be 9,590.36 euros and in single-person economic units it will be 10,104.60 euros.

Risks to the system

The new model of revaluation of benefits may generate risks for the sustainability of the public pension system, experts acknowledge, because it will delve into the Social Security deficit, which closed 2020 with a deficit of 14,979.85 million euros, the equivalent of 1.36 percent of GDP

For jose Antonio Herce, founder of the consulting firm LoRIS, linking pensions to the CPI will increase spending on pensions without social justification. This could mean an increase in spending between 2.3 and 5 percentage points of GDP.