High incomes will lose 3,450 euros of pension with the calculation of 35 years

The eventual increase in the period of years contributed for the calculation of the pension that the Government agreed with Brussels as part of the package of measures to implement the field of Social Security, and that will be necessary to receive these European funds for reconstruction, has a highly disparate impact depending on the characteristics of the different careers. Thus, in the face of an increase from 25 to 35 years of contributions to calculate the regulatory base, the decrease in the pension would not be similar for a high income, which I would lose about 3,450 euros on average per year, than for a more meager income, where the reduction in the face of the new retirement benefits would range between 641 euros and 2,025 euros per year.

It should be remembered at this point that the impact varies depending on the different determining aspects of working life. On the one hand, the increase in years of contributions for calculating the pension supposes a reinforcement of the contributivity of the System, since it assumes more years of contributions to Social Security when adjusting the retirement benefit. And on the other hand, the average reduction predicted by the experts would not be a clean sweep: for example, for careers affected by the 2008 economic crisis that lost their jobs, and that have subsequently been completely expelled from the labor market or have been framed in lower-paid jobs, this extension would be beneficial by picking up more good years of their working careers.

However, for careers that have been clearly ascending in terms of remuneration, this extension would be detrimental in the calculation of the amounts, since it would take more than the first years of working life, with a worse regulatory base. In these cases, however, the Government has conveyed to the European Commission its intention to cover the specific periods of suspension of contributions – known as coverage of price gaps-, which would eliminate these discounts for the calculation of the pension, and also provides for the possibility that in certain cases it is allowed to choose between the 25 best years, in order to similarly avoid the phases of the working life with the least contribution to the Social Security.

Further, as explained by the Research Group on Pensions and Social Protection made up of professors from the University of Valencia, Polibienestar and IVIE and the University of Extremadura, taking into account some recognizable profiles of our labor market, the difference in the average impact that would have the measure. In this sense, depending on the level of income, it is observed that for a planned pension of 2,666 euros per month with the calculation of the last 25 years, it would go on to collect 2,419 if the 35 years prior to retirement are counted. That is to say, 9.2% less, which means 246 euros per month less and a reduction of 3,450 euros throughout the year.

That would be the impact for the highest incomes who are entitled to the maximum retirement benefit granted by Social Security. However, in a next step associated with the average income, with a planned pension of 1,579 euros per month when calculated at the age of 25, with the 35-year extension, he would receive 1,434 euros per month, that is, 9.2% less -144 euros per month and 2,025 euros less for the year as a whole . In both last income quartiles, the impact is appreciated for the lower regulatory bases, where the reduction is more limited. Thus, from charging 996 euros with the last 25 years of contributions, a total of 916 euros would be received, 8% less -which implies a reduction of 80 euros per month and 1,119 euros for the whole year-. For a benefit planned at 621 euros per month, the fall when calculating with 35 years of contributions would be 7.4% (575 euros), that is, 45 euros per month and 641 euros per year.