What are the changes to pensions?

What are the changes to pensions?

New early retirement law 2021

It also introduces the so-called MEI, “a balanced, temporary and contingent tool to respond to the demographic challenge” for the Social Security, which is expected to reactivate the Social Security Reserve Fund by means of a finalist contribution between 2023 and 2032.

It also incorporates measures aimed at voluntarily bringing the effective age closer to the ordinary retirement age, establishing four ways: the revision of both voluntary and involuntary early retirement and on the basis of activity, delayed retirement, active retirement and forced retirement.

When do the pension changes take effect?

Thus, on January 1 of each year, pensions will be increased in accordance with the average annual inflation recorded in the previous year. In 2022, the increase will be 2.5% for contributory pensions and passive class pensions.

How much will pensions go up in 2021?

Therefore, pensioners will continue to suffer cuts in their purchasing power for another year. Also, since the Executive approved a pension increase of 0.9% for 2021 and the year-on-year CPI has been 2.5%, in mid-January pensioners will receive an extra income of 1.6%.

What will maximum pensions look like in 2022?

Thus, the maximum limit for all public pensions will be 2,820 euros per month in 2022, which is about 39,468 euros per year. In the case of the minimum pension for those over 65 years of age, it will be as follows.

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How much pensions can increase in 2022

Yes, this new law modifies paragraph 4 of article 144 of the General Social Security Law and article 152 of the same law, where the contribution obligations are set out. It reads as follows:

The obligation to contribute will continue in the situation of temporary incapacity, whatever its cause, in the situation of birth and care of a minor, in the situation of risk during pregnancy and in the situation of risk during breastfeeding, as well as in the other situations provided for in article 166 in which this is so established by regulation.

The periods in which the exemption foreseen in this article is applicable will be computed as having been contributed for the purposes of access and determination of the amount of the benefits. The regulatory base of the benefit will be determined, in relation to these periods, in accordance with the provisions of Article 161.4.

This pension reform mainly deals with the regulation of early retirement in any of its modalities. It modifies the reduction coefficients, the causes and opens the door to other sectors, as well as to people with disabilities.

What is the change in pensions?

The Government has raised pensions in 2021, in general, by 0.9%, as stated in the General State Budget. Minimum pensions, on the other hand, will grow by 1.8%. With this change, the average pension of a retiree will go from 1,153.84 euros to 1,170.26, some fifteen euros more in 2021.

When do the new pension reduction coefficients come into effect?

When the pension exceeds the limit established for the amount of the pensions, the reduction coefficients will be applied gradually, over a period of ten years, starting January 1, 2024.

When is the pension reform published in the BOE?

With effect from January 1, 2022, Law 21/2021, of December 28, to guarantee the purchasing power of pensions and other measures to reinforce the financial and social sustainability of the public pension system (BOE of December 29, 2021) publishes the first reform of the pension system.

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Pension increase

On the other hand, as a second objective, the balance of the system must be reinforced as the most effective way of ensuring an adequate capacity to respond to demographic and economic demands. For this purpose, measures are necessary to strengthen the financing structure of the Social Security through the assumption by the State of non-contributory expenses under the terms set forth in the agreement of July 1, 2021; at the same time, other measures aimed at containing in an equitable and fair manner the increase in expenses associated with the retirement of the baby boomers through incentives that favor the delay in access to the retirement pension are also incorporated.

This law amends various precepts of the General Social Security Law and its contents can be grouped into two main blocks. The first of these relates to the revaluation of pensions, with the consequent repeal of the revaluation index and the introduction of a new article 58 in which, in line with recommendation 2 of the Toledo Pact, the guarantee of purchasing power is recovered through the updating of pensions according to the inflation of the previous year, in full harmony with article 50 of the Constitution and the doctrine of the Constitutional Court in this matter. Article 27 of the Law on State Pensioners is also amended for the same purpose.

How much will pensioners receive in 2022?

The 2.5% increase for contributory pensions in 2022 will place the minimum retirement pension at 10,103.8 euros per year, 721.7 euros per month in 14 payments; while the maximum will be 39,468.6 euros per year, 2,819.1 euros per month.

Which is better to retire in 2021 or 2022?

If the worker has contributed less than 44 years and 6 months to Social Security, it is best to take early retirement in 2021. On the other hand, if the worker has contributed more than 44 years and 6 months, it is best to retire in 2022. All this taking into account that less money will be lost in each case.

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What is the status of pensions under the new law?

In 2021, the minimum age requirement is 66 years if you have contributed for less than 37 years and three months, and 66 if you have contributed for more than 37 years and three months. … Thus, each year the retirement age is raised by two months, and the contribution period required to retire at 65 is raised by three months.

Changes in retirement 2021

Along with this measure, all those affecting early retirement. Under the pretext of bringing the effective age and the real retirement age closer together, it has been proposed to modify the reduction coefficients that reduce the pension of people who take early retirement, becoming monthly and applicable to the amount of the pension. These coefficients will penalize people with early retirements of 24, 23, 3, 2 and one month, in most cases, and will also be applied to workers with salaries above the maximum pension amount, who are currently affected by lower coefficients.