Sunday, October 17

The Government will raise pensions above 2% in 2022

The Executive is balancing the General State Budgets of 2022, with a rise in pensions of more than 2%, as has advance The Country and government sources have confirmed Pensions will rise taking into account the new pension revaluation index of the reform agreed with unions and employers, which takes into account the average of the year-on-year CPI for the year. The increase figure is not completely closed because it depends on the inflation data for October and November, yet to be closed, but the Executive’s forecast is that its value will leave a pension increase above 2%.

Inflation soars to 4% in September, its highest rate in 13 years, on electricity

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The new formula for the revaluation of pensions will be applied like this already next year, although it is still pending approval in the bill of the first block of the reform that Minister José Luis Escrivá is undertaking. The legislation in force at the moment is that of 2013 of the PP Government, which would mean the semi-freezing of pensions, with an increase of 0.25% due to the so-called IRP (pension revaluation index).

After much mobilization in the streets and no support from the political opposition, the IRP ceased to be applied at the end of Mariano Rajoy’s term. Instead, the government of the day has approved year after year a revaluation of pensions according to prices. Last year, the rise was 0.9% and was defined according to the estimate of the price increase by the Executive.

New rise mechanism in action

But the increase will no longer be approved according to a forecast, but by applying the new revaluation formula agreed with the social agents, which is calculated with the average of the interannual CPI of the twelve months prior to December. In this exercise, the months of December 2020 to November 2021 will be taken.

For the moment, the average from December of last year to the last month of September, the last month for which we have data from the INE, leaves an average inflation of 1.91%. The National Institute of Statistics has already published that advanced CPI data climbed to 4% in September, its highest rate in 13 years, due to electricity. The forecast is that in the next two months, October and November, inflation will remain high. Funcas, for example, foresees that the data will be at 4.4 and 4.2 in the coming months.

With these forecasts, the coalition government is balancing the public accounts with an increase of more than 2%, they explain from the Executive. If Funcas estimates were met, the rise would reach 2.3%.

The 2021 “pay” and minimum pensions

In addition to the increase in pensions for next year, the coalition government will also have to include in the Budgets the payment of the so-called “pay” of pensions to which it committed last year.

The 2021 Budgets project expressly contemplated that if the average CPI for the months of December 2020 to November 2021 was higher than the estimate (0.9%), something that has happened, the difference would be paid to pensioners “before April 1, 2022 and in a single payment”.

Tomorrow, the Government will approve the draft General State Budgets for 2022 in an extraordinary Council of Ministers, in which it is expected to reveal how much the minimum and non-contributory pensions will increase, which Minister José Luis Escrivá has already anticipated that they will rise more than the rest. That is, above the CPI.

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