Wednesday, December 6, 2023

The tax that will be raised on our payrolls from January 1, 2024 to fund pensions

The pension reform was approved by the House of Representatives last March. A new law that brought new developments, such as the increase in the maximum assessment bases and contributions, improvements in minimum pensions and the introduction of a dual model for calculating pensions.

Another major novelty was the introduction of the so-called Intergenerational Equity Mechanism (MEI), the introduction of which aims to reduce the gender gap among pensioners. Its application represents the end of the sustainability factor introduced by the government of Mariano Rajoy in the last pension reform before the current one, whose function was to link the level of social security old-age pensions to the evolution of the life expectancy of pensioners.

Read Also:  USD 750 million of locked tokens will be sold in December

According to the Official Gazette (BOE), the change represents the introduction of an “instrument that follows a completely different logic and that, instead of condemning the youngest to more modest pensions, guarantees that the system we know today will be like this. “will be sustained in the coming decades by the recovery of the reserve fund.” In your case, the MEI is 0.6% of the employee’s wages.

Of this 0.6%, the company pays 0.5% and the employee pays the remaining 0.1%. A mechanism that will come into force between 2023 and 2032. In ten years, in 2033, it will act as a “safety valve” for the system. Likewise, the ministry, chaired by José Luis Escrivá, is trying to use this measure to ensure that the collection of social contributions is increased and not reduced.

Read Also:  What taxes do real estate tenants pay and what declarations do they make?

For self-employed people, it is estimated that the average salary is around five euros. If we assume a gross salary of 2,000 euros, it is estimated that around 12 euros will be paid based on this tax, of which 10 euros will be paid by the company and the other two euros by the employee. For a salary of 1,500 euros, the new tax is 9 euros per month, meaning 8.10 euros is paid by the company and 0.90 euros by the employee.

Scales for each year

According to the forty-third transitional provision “Application of the generation equality mechanism” of Royal Legislative Decree 2/2023, of March 16, the MEI contribution provided for in Article 127bis applies from January 1, 2023 to December 31, 2050, according to this scale that reflects what the company and the employee accept per year.

Read Also:  AI has come to the Ouija board
YearPercentage PointsCompanyWorkers
2023 0.60 points 0.50 points 0.10 points
2024 0.70 points 0.58 points 0.12 points
2025 0.80 points 0.67 points 0.13 points
2026 0.90 points 0.75 points 0.15 points
2027 1 point 0.83 points 0.17 points
2028 1.10 points 0.92 points 0.18 points
2029 1.20 points 1 point 0.20 points
2030 to 2050 (including anvils) 1.20 points 0.6 points 0.6 points

The situation changes between 2030 and 2050, when the same contribution rate is maintained and there is an equal distribution between employer and employee. In your case, the MEI depends on income and not on benefits. “The Intergenerational Equity Mechanism (MEI) represents a closure measure that acts as an additional security cushion for the system,” Moncloa defended months ago.

Nation World News Desk
Nation World News Desk
Nation World News is the fastest emerging news website covering all the latest news, world’s top stories, science news entertainment sports cricket’s latest discoveries, new technology gadgets, politics news, and more.
Latest news
Related news