This is how pensions have been revalued in recent years: from slowing the crisis to pushing inflation | eCONOMY

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 This is how pensions have been revalued in recent years: from slowing the crisis to pushing inflation |  eCONOMY

This Wednesday it was confirmed that pension contributions will grow by 3.8% from January 1, 2024, in accordance with the evolution of the prices of the reference period for this calculation (the average of the interannual rates from December 2022 to November of this year). This is a panorama similar to the last two pension increases, of 8.5% in 2023 and 2.5% in 2022. This symphony is not always the guideline of the evolution of these variables in Spain, especially if. .. .

This Wednesday it was confirmed that pension contributions will grow by 3.8% from January 1, 2024, in line with the evolution of prices during the reference period for this calculation (the average of the interannual rates from December 2022 to November of this year). This is a panorama similar to the last two pension increases, which are 8.5% in 2023 and 2.5% in 2022. This symphony is not always the pattern of the evolution of these variables in Spain, especially if we return to the darker economy. times. During the Great Recession, pensions fell less than inflation in the early years and less by the end of the crisis.

For this year-by-year review, the average inflation of each year is calculated by the criteria currently used in pensions (as previously defined, from December of the previous year to November of the current year), not the standardized average is commonly used for other things. Due to the suspicions that this method may be raised, it should be noted that the difference between the average available pensions and the whole year is limited to a maximum of two tenths, with one exception: in 2021 the distance was six-tenths, due to the rapidity of the price increase at that time.

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The most dangerous moment for the system is when benefits are frozen. We must travel to 2011, before the PP took the reins of the country thanks to a historic election result (186 deputies, the biggest victory of the popular party) that punished José’s economic management Luis Rodríguez Zapatero. One of the last decisions of the socialist regarding pensions was a shock: the freezing of benefits in 2011 was ordered due to the worsening of the crisis. That means a bite in the pockets of retirees, because inflation from December 2009 to November 2010 was 1.6%. At that time, a reform was also approved that raised the retirement age to 67 years if the contribution requirements were not met. Although in previous years the socialists have approved the increase in values, this brake has cut the purchasing power of pensioners.

It continued to contract the following year: the PP set an increase of 1% for 2012, although inflation in the reference period of 2011 was 3.3%. The second review of Mariano Rajoy’s first term offers a similar balance. Pensions were ordered to increase by 1% in 2013, while prices rose by 2.4% in 2012. Then Spain faced its worst economic crisis, with six million unemployed. “This decision represents an exercise of responsibility that will allow us to achieve the objective of the public deficit,” said the then Minister of Labor, Fátima Báñez.

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The PP has again cut the purchasing power of pensioners with the revision applied in 2014, which was 0.25%, despite the fact that prices grew by 1.6% from December 2013 to November 2014. It was the first revaluation that conditioned by the so-called sustainability factor, the key to PP’s pension reform. It consists of increases in benefits specified “between a minimum of 0.25% for all pensions, if the economic situation is not favorable, up to the annual change in the CPI plus an additional 0.50 percentage points, if the context “allows it economically,” explained the PP Government.

In practice, all increases are limited to 0.25% and above. However, even though the benefits hardly grow, a deflation scenario is immediately entered: prices stopped in 2015 and fell by 0.6% in 2016 and 0.3% in 2017. In other words, the purchasing power is almost nonexistent’ y gained, but at least it stopped falling like previous years.

At the end of 2017 (which ended with an inflation of 2%), Rajoy’s Council of Ministers once again approved a 0.25% increase in pensions for 2018. However, in the middle of the course there political upheavals that They changed the perspective of pensioners. Pedro Sánchez became president of the Government in June of that year after the first and only successful motion of censure in democracy. Two months later, it approved a large increase in benefits with retroactive effect, so that they grew by 1.7% in 2018.

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In 2019, pensions increased by another 1.6%, almost the same as inflation in 2018 (1.7%); and another 0.9% in 2020, compared to the CPI of 0.7% last year. The biggest gap in favor of pensions occurred next year, in 2021, when they grew by 0.9% despite the fact that prices fell by 0.2% during the worst months of the pandemic. Precisely 2021 is the year in which the coalition government approved a new change in the pension architecture. The Minister of Social Security, José Luis Escrivá, turned his back on the sustainability factor of the PP and linked the evolution of the payroll to the price.

In 2022, pensions increased by 2.5%, as were the prices in the reference period (December 2020 to November 2021). Then the inflationary crisis began to hit, which exploded throughout 2022 with the Russian invasion of Ukraine and the acceleration of energy prices. Since January 1, 2023, pensions have grown by 8.5%, as well as prices. In the next growth, inflation and pensions went together again, at a rate of 3.8%.