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The New Year will bring a new increase in contributions and a new tax that hits the high-earners in Spain to help pay the pensions of the baby boom generation. This is a consequence of the tax reforms devised by Spanish economist José Luis Escrivá, currently serving as governor of the Bank of Spain. While we wait to find out by how much the minimum bases will increase (these are linked to the rise in the minimum wage), the contributions of around 1.2 million workers who fall into the maximum base already know what the increase will be: they will rise by 4%, 1.2 percentage points above the CPI (consumer price index) due to the capping that began this year and which will mean an accumulated increase of 38% until 2050.
Therefore, from January the maximum contribution base will rise to almost 59,000 euros per year, which is 4,909 euros per month, almost 200 euros more than at present. Until now salaries above the maximum base were exempt from paying contributions, but this year a new tax will come into force for incomes above 58,911 euros gross per year. This is the so-called 'solidarity quota', which will gradually tax the salary of employees that are above the maximum contribution base, but it does not apply to the self-employed.
In 2025, therefore, this contribution will begin to be applied for the first time, which will not generate any rights for these taxpayers' future retirement and will entail an extra contribution of 0.92% from their salary between the maximum base and 10% above that base (between 58,911 and 64.802 approximately). Then it is 1% for the part of the salary between 10% and 50% above the maximum base (between 64,802 and 88,366 euros), and finally a third levy of 1.17% for the salary that exceeds 50% of the maximum base, the part that is above 88,366 euros. The distribution of the contribution rate for solidarity between employer and employee will maintain the same proportion as the distribution of the contribution rate for common contingencies.
Moreover, the additional contribution derived from the intergenerational equity mechanism (MEI) will be added to them and the rest of the workforce. In this case this contribution applies to all workers, including the self-employed, and this year it will increase by one tenth of a percentage point and will represent 0.8% of contributions. All the money collected through the MEI goes directly to fill the pension 'piggy bank', which will close the year with 9.3 billion euros.
The maximum pensions, those paid to this group of workers, will not increase at the same rate as their contributions, but much more slowly. Nevertheless, for the first time this year they will rise by more than the rest. Their pensions will rise by 2.915%, adding 0.115 percentage points to inflation. As such, the system's maximum monthly pension will rise to 3,267 euros (45,745.70 euros per year), almost 100 euros more per month than at present.
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