Spain’s retirement age to rise again in 2026

The statutory retirement age will increase by two months in 2026, reaching a total of 66 years and ten months. This will constitute the concluding phase of the transition period initiated in 2013 to attain age 67, coinciding with the implementation of the new pension calculation system. Throughout 2026, this will be the age at which individuals are eligible to retire with full pension benefits, although the retirement age will remain at 65 for those with 38 years and three months of contributions to Social Security, without penalty.

From 2013 to 2027, the statutory retirement age has been progressively rising from 65 to 67, in accordance with the pension reform established in 2011 through an agreement between the Socialist government of José Luis Rodríguez Zapatero, employers, and unions. Next year will mark the inaugural implementation of the “dual system” for pension calculation, introduced as part of the pension reform by the current Governor of the Bank of Spain, José Luis Escrivá.

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This modification will enable, at the conclusion of the 2037 period, a selection between two pension calculation methods: either the final 29 years of employment, excluding the two poorest years (24 months), or the current calculation period, which encompasses the last 25 years. The rollout of the new system will occur gradually over a period of 12 years, beginning in 2026, when pensions will be computed based on the most recent 304 months of contributions (equivalent to 25.33 years), with the option to exclude two months or to continue utilising the existing 25-year computation period.

Updates to contribution levels

2026 also commences with an increase in contributions to the Intergenerational Equity Mechanism (MEI), elevating from 0.8% to 0.9%, with 0.75% borne by the employer and 0.15% by the employee. This supplementary contribution seeks to generate revenue to offset the heightened expenses related to the retirement of the baby boom generation. The objective is to attain a 1.2% rate by 2029 and sustain this level through 2050.

Regarding the “solidarity contribution,” an additional surcharge for higher compensation introduced initially in 2025, it will entail a rate ranging from 1.15% to 1.46%. This proportion will also progressively rise until the year 2045. Furthermore, the maximum contribution base will increase by 3.9% in the coming year (inflation plus 1.2 percentage points), reaching approximately €4,922 per month.

Minimum and non-contributory pensions will be increased once more

Minimum and non-contributory pensions will once again be raised above the average inflation rate, as the Social Security system is required to implement an additional increase to further narrow the disparity between these benefits and the poverty threshold. Under the most recent reform, these pensions, which are received by approximately 2.5 million individuals, will need to increase more than other pensions in 2026, exceeding the 2.7% rise determined by the average inflation rate.

The objective for minimum pensions is to align with 60% of the median income of a household comprising two adults by 2027, while non-contributory pensions are expected to attain 75% of the poverty criterion projected for a single-person household in that year.

Consequently, the reform stipulates that starting in 2025, the maximum amount of the initial contributory pension will be adjusted annually in accordance with inflation, with an additional cumulative increase of 0.115 percentage points each year until 2050. If the utmost in 2025 was 3,267 euros per month, this additional inflationary increase will likely elevate it to approximately 3,361 euros.

Author: Derek Appleton