The Council of Ministers has approved this Tuesday the revaluation of pensions and other public benefits for 2022. The rise, effective from January 1 of this year, supposes a 2.5% increase in contributory pensions and State passive classes, while the increase in minimum and non-contributory pensions and the Minimum Vital Income (IMV) will be 3%. In total, the Government will allocate 6,500 million euros to revalue pensions and make the compensatory payment effective. This amount includes the cost of the ‘paguilla’ to pensioners due to the deviation of prices in 2021 with respect to the initial rise (0.9%).
Specifically, the 2.5% increase for 2022 is the result of applying the average consumer price index (CPI) between December 2020 and November 2021According to the formula included in the Pension Law approved last December, it is based on the evolution of the CPI.
This increase, also included in Law 22/2021 on General State Budgets for 2022, is intended to maintain the purchasing power of pensioners. In total, this increase reaches 11.5 million benefits and its total amount amounts to 3,900 million euros, according to Social Security calculations.
On the whole, The average pension rises by 651 euros per year compared to 2021, going from 15,774 euros to 16,424 euros year. For its part, the minimum retirement pension will rise to 10,103.80 euros per year compared to 9,808.4 euros in 2021. In cases of having dependent spouse it will reach 12,467 euros per year. Meanwhile, the maximum retirement pension will be 39,468.66 euros per year, that is, 962.78 euros more than in 2021.
In addition, the royal decree includes the approval of a compensatory payment for pensioners and beneficiaries of the IMV for the revaluation of 2021, which was lower than the CPI registered in that year. For an average pension of 1,127 euros per month, this payment is 250 euros. In total, 2,600 million euros have been allocated to compensate for this deviation, as confirmed by the ministry led by José Luis Escrivá.
Social Security deficit
In the press conference after the Council of Ministers, Escrivá advanced that Social Security will close 2021 with a deficit of 1% of GDP, two tenths below forecast. Escrivá explained that “the downward path” is maintained in the negative balance of the system, so that in 2022 it will continue to decline until it reaches 0.5% of GDP.
The minister stressed that this improvement in Social Security accounts is due to higher income from contributions derived from the “extraordinary dynamism of employment” and the assumption of inappropriate Social Security expenses by the State.
On the other hand, the General State Budgets have already absorbed most of the expenses of non-contributory public policies that until now were financed by Social Security. In 2022, up to 18.9 billion euros will be transferred for this reason, which will cover 80% of these expenses, and in 2023 100% will be covered.