Sunday 1/16/22
INFLATION

This is how Spanish pensions will increase in January 2022

In addition to the increase, the government will allocate 1,900 million euros in January to compensate pensioners with a one-off payment for the deviation of inflation
A retired couple on vacation in Ibiza. Photo: Pixabay.
A retired couple on vacation in Ibiza. Photo: Pixabay.

The Spanish statistical office (INE) published on Monday the advanced data on inflation for November, which estimates a year-on-year price rise of 5.6%. Although the INE will publish the final consumer price index (CPI) data on 15 December, it is already possible to anticipate how much contributory pensions will increase in 2022.

With the new calculation method, the December inflation rate is no longer taken as a reference, but the the twelve-month average interannual CPI. In this case, from December 2020 to November 2021.

According to this new calculation method and with the data published so far, contributory pensions will rise by 2.5% in 2022, which is almost 26 euros more per month on average. For their part, the 2.3 million recipients of minimum and non-contributory pensions will see their pays rise 3%.

The state budget for 2022, which last week received the green light from the lower house of Parliament (Congreso de los Diputados), does not include the specific figure by which contributory pensions will rise next year. The reason is that when they were drawn up, the inflation data to which their revaluation is linked was still unknown.

However, the draft budget does include the increase for the minimum and non-contributory.

Compensatory pay

The CPI also makes it possible to calculate the amount of compensatory pay (la paguilla) that pensioners must receive in January in the event of a deviation in inflation from what was estimated at the beginning of the year. In 2021 the rise was 0.9% and if the average inflation is 2.5%, there is a deviation of 1.6 percentage points.

The Minister of Inclusion, Social Security and Migration, José Luis Escrivá, estimated the total cost of this compensatory pay at about 1,900 million euros. Pensioners will receive this one-off payment in January, with budgetary effect in 2021.

But for the State the cost doubles, since the compensation for the deviation in prices must be added the same amount to consolidate the pension payroll for 2022 (another 1,900 million). Therefore, the total amount of the 'pay' will be around 3,800 million euros.

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