The average pension doubles in the last twenty years, above wages and CPI

BarcelonaSalaries and pensions are moving along different paths. The divergence is "absolutely strategic" for the evolution of the economy and social cohesion, assures Jordi Garcia, professor of labor law at the University of Barcelona (UB). This August, retirees have collected an average of 1,574.9 euros, 4.5% more than a year ago, according to the Social Security. However, prices in July rose by 3.5% compared to 2025, while awaiting to know how much the cost of living has increased this month (based on data from the CPI, the consumer price index, published by the INE).

Pensions have more than doubled in the last twenty years – they have risen by approximately 108% – and have soared above inflation, according to data from the National Social Security Institute (INSS) analyzed by ARA. In 2006, the average pension in Catalonia was around 735 euros per month, and in Spain, 722.71 euros.

According to the director of the studies department at the Chamber of Commerce of Barcelona, Joan Ramon Rovira, the rise in pensions is motivated because "more and more people are joining the group of pensioners who, during their working lives, have earned higher salaries and, therefore, have also contributed more". "The pension is calculated based on what you have contributed," he recalls. Although the average pension in August has stood at 1,574.9 euros, those who have just retired have received a first pension of 1,707.2 euros.

In parallel, in the last two decades, salaries have grown a little more than half as much as pensions: in 2024 – the latest available data – Catalan workers earned 50.9% more than in 2006 and, in the State as a whole, the increase was 51.7%, according to the Active Population Survey (EPA). Wages have risen above the CPI, which is rising around 45%, so workers have seen their purchasing power slightly increase.

A problem for the economy as a whole

Rovira recalls that pension growth is striking, partly because the starting point of monthly payments was much lower than that of salaries. "Normally, the purchasing power of people who retire falls compared to what they earned when they were working." However, Garcia assures that the fact that pensions are rising above salaries is "an absolutely negative phenomenon for the economy, because it is evident that young people consume more." Pensions are a hot topic that arouses great passions, and Garcia tries to set aside moral considerations from his analysis: "I say this from the point of view of the economic structure, regardless of whether it is fair or not.

Beyond averages, in the last twenty years the distribution of the group of pensioners and that of workers has changed. While in 2006 only 2.6% of retirees earned more than 2,000 euros per month, by 2025 one in four exceeded this threshold. On the other hand, the number of workers earning, at most, twice the minimum interprofessional wage (SMI) is increasing: from 43.26% of contributors twenty years ago to 67% in 2024.

minimum interprofessional wage (SMI): from 43.26% of contributors twenty years ago to 67% in 2024.

"They are two different causes, they are not related," recalls Rovira and, among the factors that explain the slowdown in wage growth, he highlights the economy's productivity. In this context, Jordi Garcia emphasizes that the current remuneration of workers will cause future pensions to "be lower."

Increase in pensions

Social Security revalued contributory pensions – including retirement pensions, the subject of this article – by 2.7% for 2026. The administration sets the increase in accordance with the price increase of the twelve preceding months. The average pension in August has risen more because, during the year, people who are entitled to a higher monthly payment have retired. This August, there are 6.74 million retirees in the State, about 260,000 more than in 2025.

At the same time, the Spanish government decreed a 7% increase in minimum pensions. For retirees aged 65, it is 936.2 euros if they have no spouse; 888.7 euros if they do, and 1,256.6 if their partner is dependent. According to the law, minimum pensions must grow above the average until 2027 to reduce the difference with other benefits and lift them out of the poverty threshold.

Since 2021, with the last major reform of the pension system, benefits have been revalued by law each year in accordance with the increase in the cost of living. Until then, increases were set by the 0.25% index approved by the executive of Mariano Rajoy (PP), which led to large protests.