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Pensioners all across Spain are in for a welcome improvement come January, though it won’t be quite as generous as in past years. While the definitive figures won’t be confirmed until December, early projections suggest that pensions will rise by about 2.6% in the new year, which translates to roughly an extra €35 per month.

 

These calculations come from forecasts by the Savings Banks Foundation, Funcas.

 

That 2.6% increase would be the smallest since 2022, about 0.2 points lower than this year’s raise and far less than the 8.5% jump seen in 2023.

 

Since 2022, contributory pensions have been automatically tied to the average inflation over the prior twelve months (from December to November) so that each year’s rise doesn’t need fresh approval by the government. This system is intended to give older people stability and prevent their purchasing power from being eroded by rising prices.

 

With the latest Consumer Price Index data already out, the average inflation over recent months is 2.59% and Funcas expects that figure to stay roughly the same until the end of the year, forecasting 3% for October and 2.8% for November.

 

While it’s maybe lower than some were hoping for, if the projected increase of 2.6% is applied in January, pensions across the system will grow by about €35 in January, taking the average pension close to €1,350 a year, something that’s never been achieved before.

 

Around 6.5 million pensioners would see modest rises each month, with some General Regime pensioners hitting or topping €1,700. Collectively, these increases would add roughly an extra €550 per person annually.

 

However, it seems that the self-employed will once again get the short end of the stick with a much smaller financial bump of roughly €26 extra per month, bringing their pensions to about €1,037.

 

Widow’s pensions might rise by approximately €24 to about €960. Permanent disability pensions are likely to increase a bit more, by about €31, landing at around €1,241. Orphans’ pensions could pick up €13 to reach around €539 and payments for family members might go up by €20 to hit €803.

 

There is one group who could see much larger hikes: recipients of minimum, non-contributory benefits. That group, numbering about 2.6 million people, could see increases well above inflation, thanks to pension reforms aimed at improving the financial situations of the most vulnerable.

 

And while an average increase of 2.6% looks pretty modest, Spain’s total spending is projected to more than double by 2026, with a 5.2% surge driven by higher new pensions. That could cost about €10 billion more.

 

These pressures are drawing caution from the International Monetary Fund, which warns that Spain’s ageing population will strain public finances more than in its neighbours. The IMF estimates that, by 2050, the cumulative extra pension spending could equal a massive 44.2% of today’s GDP, or around €650 billion, unless further reform is introduced.

 

 

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