The Foundation for Applied Economics Studies (Fedea) has proposed partially link pensions to the evolution of the Consumer Price Index (CPI) as a measure to face the expected price increase in 2025. This approach seeks to protect the lowest pensions from the loss of purchasing power, allowing the highest pensions to assume a limited adjustment in their real value.
In summary, what the foundation proposes is that higher pensions can accumulate a loss of purchasing power limited as long as the lowest ones remain protected against this rise, partially taking into account the CPI.
This was stated by the executive director of Fedea, Ángel de la Fuente, during the inaugural conference of the National Congress of Economists and Auditors in which different current economic issues in our country were addressed. Fedea warns that this rise could have a fiscal impact on the contribution of each worker.
What de la Fuente subscribes to is that, faced with the increase in pensions for 2025, measures are established with the objective to guarantee the sustainability of the pension system in Spain and long-term economic viability.
According to the executive director of Fedea, this system “going in the wrong direction”, since, he argued during his speech, the problem lies in the fact that the new average pensions are above the average salary: “When retirees earn more than active workers it is dangerous,” he added.
Adjust retirement age to life expectancy
The Foundation proposes a series of structural changes to the pension system. For example, adjust retirement age to life expectancy It would have the effect that, by increasing longevity, the possibility of working for more years would open up. On the other hand, Fedea proposes reviewing the calculation of pensions using the complete history. Finally, it is proposed a surcharge on the state personal income tax rate to consider a more equitable tax.
How does the current pension system work?
Contributory pensions will be revalued in accordance with article 58 of the General Social Security Law (LGSS). This establishes that contributory pensions will grow each year according to the average CPI of the last twelve months, that is, from December 2023 to November 2024, as explained in the regulations. Since the final CPI data (2.4%) has been confirmed, it has been confirmed that pensions will rise by 2.8% in 2025, so about 600 euros on average will be revalued in the case of the average pension of retirement, as stated by the Ministry of Inclusion, Social Security and Migration.