Published on Tuesday, October 19, 2021

Spain | Pensions in the 2022 budgets

Despite its importance as a key category of public spending and the principle of separation of financing sources, it is very difficult to get an idea of the financial position of the pensions system through the central government budget. In this article we analyze the main budget lines planned for 2022.

Key points

  • Key points:
  • Pensions are the major item in the 2022 Spanish General State and Social Security Budgets. They are also the area of social public spending that has increased most in absolute terms — from EUR 162,681 million budgeted for 2021 to EUR 170,494 million planned for 2022. This includes contributory (EUR 149,996 million), non-contributory (EUR 2,587 million) and passive class pensions (EUR 17,911 million).
  • Social security payments are the main source of funding for contributory pension and other non-pension provisions—such as unemployment benefits or short-term disability payments— expenditure on which amounts to EUR 22,457 million and EUR 10,818 million, respectively.
  • The pensions system requires an increasing amount of state transfers to finance its deficit. Total planned transfers amount to EUR 28,243 million — currently equivalent to an average of EUR 2,861 a year per pension.
  • The measures adopted in 2021, imply greater structural expenditure by the pensions system. The replacement of the index-linked pension scheme (the "IRP" in Spanish) with the consumer price index (CPI) and the removal of the Sustainability Factor will drive up pension expenditure by almost four points of GDP in the next few decades — thereby continuing to increase the current structural deficit which is transferred to the state.

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