2023-10-04 00:42:10
With the year entering its final stretch and the Government still in office, many pensioners are wondering when the percentage that pensions will increase in 2024 will be announced and if the country’s political instability will hinder the increase.
As for the second doubt, pensioners can rest assured: their benefits will revalue with inflation just as they did this year, regardless of whether a Government is formed or there is a repeat election. “As it is a right recognized by the Law and automatically applied, the increase in pensions linked to the CPI will be maintained and applied, regardless of whether a Government is formed or whether there is an electoral repetition. Therefore, the inclusion of this increase in the General State Budgets 2024, if their approval is postponed due to lack of Government (with a government in office), or due to a lack of parliamentary majority that would give support to these Budgets, or in case electoral repetition,” explains the BBVA Pension Institute.
As for the amount, it will depend on how inflation evolves during October and November. As established by the General Social Security Law in its article 58, contributory pensions will be revalued based on the annual average Consumer Price Index (CPI), which is measured between November of the current year and December of the previous year, that is, , between November 2023 and December 2022. Therefore, we will have to wait to know the inflation data for November to calculate the revaluation. The INE will publish the advance CPI data for November on the 29th of that month, which will allow an approximate calculation of the increase in pensions, but the final percentage will be known on December 14.
And what will be the percentage of the increase? In 2023, contributory pensions were updated by 8.5%, a historical maximum, corresponding to the average interannual CPI between December 2021 and November 2022. The revaluation estimate for 2024 would be around 4.7%, taking into account the CPI estimate made by Funcas (as of July 2023). However, taking into account the advance CPI data for September that was released last week, average inflation currently stands at 3.85%.
Beneficiaries of contributory pensions will also experience an increase in their benefits, but this does not depend on the CPI, but is set annually in the General State Budgets (PGE), which have not begun to be drafted since the Government is in office, and It is usually higher than inflation, as these pensions are lower. This year the extraordinary 15% increase approved in the summer of 2022 was extended due to the impact of inflation. In addition, in 2024 many other factors will have to be taken into account to calculate the revaluation of pensions.
Extra increase in the minimum contributory and non-contributory
In addition, the pension reform states that, between 2024 and 2027, minimum pensions will rise above inflation to guarantee their adequacy. Based on this criterion, the minimum contributory pension will grow over the next four years until it reaches 60% of the median income in 2027 and cannot be lower than the poverty threshold calculated for a household composed of two adults, which translates at 16,500 euros. That is, the minimum contributory pension with a dependent spouse will go from the current 966.20 euros to 1,178.50 euros per month, 22% higher.
And following this same criterion of sufficiency, the minimum non-contributory pension will have to be placed at 75% of the individual poverty threshold. Therefore, they would go from 6,784.54 euros per year (484.61 euros per month) in 2023 in the case of a full amount, to reach almost 8,300 euros per year (592 euros per month) in 2027. That is, it is expected to increase by 29 .50% over the next four years, although specifically in 2024 the total amount of non-contributory pensions would be close to 7,300 euros per year (almost 520 euros per month).
Increase in minimum widow’s pensions in 2024
On the other hand, the Government also included in the second leg of the pension reform to increase the minimum widow’s pensions to equate them to the minimum contributory ones. The measure recognizes the increase in these benefits in 2024 from 40 euros per month for individual pensions (for example, for those over 65 years of age it would go from 783.10 euros per month in 2023 to 823.1 euros per month in 2024) to 126 euros more per month for widows with charges (going from 95.76 euros per month in 2023 to 1,031.9 euros per month in 2024), so the total increase would be 1,775 and 3,800 euros respectively for four years. That means an increase of 17% for individuals and 30% for those with a dependent spouse. Although the increase will be progressive over four years, a higher increase will be applied in the first year, in 2024.
Increase in maximum pensions in 2024
Like the rest of the contributory pensions (except the minimum ones), in 2024 the maximum pensions will increase by the average interannual CPI between December 2022 and November 2023. The so-called unstopping of the initial maximum pension will begin to be applied in 2025, and will consist of revalue the maximum pension by increasing it with the CPI plus an additional increase of 0.115 cumulative percentages each year until 2050, which will mean an approximate increase of 3% in that period.
Gender Gap Complement Upload
In 2024, the extra increase in the gender gap supplement will also begin to be applied. This supplement will increase by 10% in 2024 and another 10% in 2025, in addition to its annual revaluation according to the CPI. In 2023, the gender gap supplement amounts to 30.40 euros per month for each child (425 euros per year, in 14 payments), with a maximum limit of four times that amount. Therefore, with a revaluation of 4.18% plus that 10% additional increase in the supplement, this gender gap supplement could be around 35 euros per month in 2024.
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