"In 2027 all workers will see a small increase in this contribution on their payroll"

Starting in 2027, the pension system will finish implementing a series of changes that began in 2013 and that will affect in a few months those who retire starting next year, but also workers who are active. Alfonso Muñoz, an official at the National Social Security Institute (INSS), has explained on his YouTube channel the important changes that must be taken into account in this matter starting in January.

As detailed, in 2027 the reform "will not only affect those who retire, but will also affect those who continue to work." Specifically, one of these changes is related to the increase in the Intergenerational Equity Mechanism (MEI), which consists of "an additional contribution aimed at reinforcing the financing of the public pension system," Muñoz clarifies.

If in 2026 the MEI was 0.90%, by 2027 the percentage will rise to 1% of the contribution base. The expert indicates that of that 1%, "0.83% is borne by the company and 0.17% is borne by the worker."

Muñoz gives the example of a worker with a contribution base of 2,000 euros per month. "In 2027, the part corresponding to the worker for the MEI will be 0.17% on that basis. That is, the worker will be deducted approximately 3.40 euros per month," while the company will assume 16.60 euros. In total, on a base of 2,000 euros, "20 euros per month will be quoted for the Intergenerational Equity Mechanism", mostly assumed by the company, he explains.

For this reason, "in 2027 all workers will see a small increase in this contribution on their payroll." This is an "overestimation" with which the Government seeks to "increase income to face the greater expense that the retirement of the baby boom generation will entail." The objective of the MEI is "to reach 1.2 in 2029 to maintain it until 2050," clarifies Muñoz.

Another change that also affects workers has to do with the maximum contribution base, which will continue to increase. "This means that workers with higher salaries will contribute a higher amount," says the official.

At this point, Muñoz clarifies that "just as the law establishes that the maximum contribution bases will increase progressively, the law also establishes that the maximum retirement pension will progressively increase above the CPI." Specifically, by 2027, the maximum pension will rise "0.115% above the CPI."