Social security already pays out more than 12,000 million euros per month in defined contribution pensions

More retirees than ever with increasing benefits and skyrocketing inflation. This is what causes the unprecedented increase in spending on Social security for the payment of pensioners’ and widows’ salaries, whose growth rate has tripled in just two years, from an annual growth of 3.4% in 2021 to the current 10.8%.

The monthly cost of contribution fees, for the first time in history, has crossed the barrier 12,000 million euros and will continue to set records month after month, causing tensions in the system despite reforms being implemented to achieve its sustainability, which will end the year with deficit it is estimated at 0.5% of GDP despite the fact that the government has promised to repair the budget hole already this year.

Specifically, spending on pensions contributions in July amounted to 12,017.8 million euros, which represents 11.7 percent of gross domestic product (GDP) in the last 12 months, according to data published this Tuesday by the Ministry of Inclusion, Social Security and Migration.

The reason for this dizzying consumption is mainly in inflation. The price escalation that started in 2022, fueled by increases in the price of electricity and gas, meant that the executive had to revalue pensions by 8.5% this year to comply with the law and maintain the purchasing power of more than 9.1 million pensioners.

Thus, in the last decade, Social Security has increased monthly expenditures for pensions by more than 4.1 billion euros, and this year it allocates 1,000 million more than just twelve months ago. The number of pensions, however, is growing at a significantly lower annual rate, 1.1 percent, but in the last ten years, almost 800,000 more pensions have been received, one million more than in 2012.

After the increase in pensions with the CPI that has been applied since the beginning of the year, the average pension increased in July on a year-on-year basis by almost 9.6 percent, up to 1,375.1 euros per month. For its part, the average salary in the system, which includes different types of pensions (retirement, permanent disability, widow’s, orphan’s and for the benefit of relatives), also increased by 9.6% on an annual level, and in July it amounted to 1195.1 euros per month.