The Spanish government has taken the first step towards increasing pensions in 2027. The decision, approved on Wednesday, November 11, marks the beginning of a procedure that will affect more than 10.2 million pensioners, including public servants covered by special pension schemes.
The exact size of the indexation will be determined according to average inflation for the period from December 2025 to November 2026. Annual inflation in the country reached 4.9% in September, while pensions were increased by 2.7% in 2026. The final figure for 2027 will become clear after the November data are published.
Expected increase of around 3.6%
According to an estimate by Funcas, an increase of approximately 3.6% would result in an additional cost of around €8 billion for the pension system. Including the costs associated with the growing number of pensioners and the replacement effect, the total increase in social security spending in 2027 could reach €14 billion.
With such an increase, the average retirement pension would rise by €56.74 per month and exceed €1,632. These calculations are indicative, as the final percentage will depend on average inflation for the entire specified period.
Following the initial decision, a statutory instrument with the force of law will have to be adopted. It must undergo public consultation and receive technical reports before being approved once again by the Council of Ministers and published in the Official Gazette.
Minimum pensions will rise faster
Minimum and non-contributory pensions will be increased by more than the overall consumer price index. In March 2024, a mechanism linking these payments to poverty thresholds was adopted. Nearly 2.6 million people are expected to benefit from it.
Due to the absence of a new state budget, the exact percentage for minimum pensions will be determined by a separate decision of the Council of Ministers.
Social Security Minister Elma Saiz said that “this mechanism, approved in 2021, managed to reduce the gap between men’s and women’s pensions by 2.4 percentage points during this period”.
Changes to the pension system
Between 2018 and 2026, the total amount of pensions in Spain increased by 28.1%, while the average pension rose by 44.5%. Minimum pensions increased by between 43% and 69%, depending on the type, while non-contributory pensions rose by 65%.
However, the pension reform is also gradually increasing the retirement age. In 2027, it will reach 67. The current effective average retirement age is 65.4, while deferred retirement already accounts for 11.5% of new pensions. This is 6.7 percentage points more than in 2019.
At the same time, the number of contributors has reached a record 22.6 million. Revenue from social security contributions increased by 7.6% in 2026, supported by higher maximum contribution bases, the solidarity contribution and the Intergenerational Equity Mechanism.