Spain must count on record amounts for old-age pension payments

by Lorraine Williamson
old-age pension

The number of people in Spain entitled to an old-age pension has passed ten million for the first time this year. With an increase of more than 2% compared to a year ago, this has major consequences for the Spanish treasury. 

More and more ‘baby boomers’ (born between approximately 1955 and 1965) in Spain are entitled to their pension, which means that the working population is shrinking and the aging population is actually increasing. In September, the amount for paying out all pensions rose to more than €12 billion, which is an increase of almost 11% compared to September 2022. 

More pensions during economic recession 

This increase is not only the result of the increasing number of pensioners, but also of the increase in the pension amount. In January, the old-age pension was increased by 8.5% to maintain purchasing power at current inflation. Last September, more than ten million pensions were paid out, which is 1.24% more than a year ago. That is the largest increase since the previous economic crisis. In 2013, the number of people claiming an AOW benefit increased by more than 2%. In times of economic recession, the number of unemployed people who decide to take extended retirement increases and they continue to work less often when they reach retirement age. 

The number of benefits will continue to increase until 2040 

Currently, the relatively large group of people born in 1958 are reaching retirement age. The expectation is that the peak has not yet been reached, as it is only expected from the second half of this decade to mid-2040. 

Cogesa Expats

The benefits that are most often paid out in Spain after the old-age pension are the widow’s pension (almost 2.5 million, monthly costs: more than €2 billion) and the long-term disability benefit (more than 945 thousand, costs: more than €1 billion per year).

In September, the total number of benefits increased to over 9 million, as almost a million people are entitled to more than one benefit; This is often an old-age pension in combination with a widow’s pension. According to data from the Seguridad Social, the latter pension is the main income for 1.5 million people, almost 96% of whom are women. 

The total amount for social benefits and pensions paid out by the Spanish Segurid Social is equal to 11.7% of the Gross National Product. If the pensions of all civil servants are also added, this is even equal to more than 13% of the GNP. 

Also read: Changes in the state pension

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