The Spanish Government has announced plans to urgently process a decree that will allow for the adjustment of pensions in 2027. The decision was made during a Cabinet meeting, with Elma Saiz, the Minister of Inclusion, Social Security and Migration, stating that this marks the beginning of the process to increase pensions.
The exact percentage increase will be determined once the inflation figures for November are released. The Government anticipates that the rise will be between 3% and 4%, although the final figure will depend on the latest inflation data, which is set to be published by the National Statistics Institute (INE) on 27 November.
Current economic forecasts suggest an increase of around 3.5%. Funcas, a Spanish economic research organisation, estimates inflation rates of 4.6% for October and 4.4% for November, indicating a potential pension adjustment of approximately 3.52%. Until the definitive data is available, the Government is maintaining a range of 3% to 4% as a reference.
This adjustment will apply to both contributory pensions and minimum pensions, with the new amounts to be outlined in the forthcoming legislation. During her address, Saiz also presented a report on the evolution of the public pension system and the impact of recent reforms. According to the report, the average pension has increased by 44.5% from 2018 to 2026, while minimum pensions have risen between 43% and 69%, and non-contributory pensions have grown by 65%.
The report also indicates that the effective retirement age has risen to 65.4 years in 2026, a trend linked to reforms aimed at enhancing the sustainability of the pension system. The Government expects a 7.6% rise in social security contributions by the end of 2026, which will represent 10.7% of the country’s Gross Domestic Product (GDP).
Saiz highlighted that employment growth has strengthened the system's resources and improved the ratio of workers to pensioners. Another significant point raised by the minister was the recovery of the Social Security Reserve Fund, commonly referred to as the 'pension piggy bank'. This fund reached a historic high of €66.815 billion in 2011 but saw a gradual decline, bottoming out at €2.132 billion in 2021. The Government projects that the pension fund will finish 2026 with approximately €19.841 billion.
By expediting the new decree, the Government aims to ensure that pensioners maintain their purchasing power in line with price developments.
