Contributory pensions will increase by 2.5% as of January

With the reform, last 12 months' CPI is the indicator for revaluing pensions every year

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Pension funds are a vehicle for retirement.

MADRIDAs of January 1, 2022, pensioners will see their contributory pensions go up by 2.5% as a result of the increasing CPI. This raise is the result of the new revaluation formula included in the pension reform bill, which takes into account average year-on-year inflation of the previous 12 months, that is, from December of last year to November of this year. This was agreed by the Spanish government, trade unions and employers in the summer, leaving behind the 0.25% maximum the PP's reform approved. In addition, the agreement states that, in case of negative inflation, pensioners will not see their income reduced, but it will remain the same.

The calculation could be made this Monday after the National Statistics Institute (INE) has published that the anticipated Consumer Price Index has risen again in November by 0.4 compared to the previous month, which has placed the annual rate at 5.6%. The general state budgets for 2022, approved last week in the Congress of Deputies, included this revaluation, although no figure was specified because until now the inflation data was not yet known.

Sources in the Ministry of Finance pointed to an increase of between 2.2% and 2.3% next year, a figure that has finally risen to 2.5% due to inflation. In any case, we will have to wait for the final CPI figure for November (although it is not normally different from the anticipated figure), which the INE will publish on 15 December to confirm the exact percentage of the increase in contributory pensions from January onwards. Sources at the Ministry of Inclusion and Social Security point out that the revaluation will mean an additional €3bn in expenditure.

The CPI, however, will also revalue the compensatory payment of pensions, that is, the payment that pensioner receive if prices change considerably (in 2021 increased 0.9%). From the Ministry of Inclusion and Social Security estimated that the cost of this compensatory payment will be "just over €2bn", which will be paid in January.

Minimum pensions and public wages

What the State's public accounts do include is the revaluation of minimum and non-contributory pensions, as well as the minimum living income, which will be 3% in 2022, as well as the 2% increase in civil servants' salaries. In total, €171bn will be allocated from the public accounts of the State to pay pensions (4.8% more than the current budget).

Inflation has been on the rise for months, despite the fact that supervisory bodies maintain that it is a "transitory" growth. The culprits of this increase have been on this occasion the rise in food prices and, to a lesser extent, fuel for private vehicles, a fact that contrasts with the declines experienced in November 2020.