Friday, 17 October 2025, 14:55
Pensioners in Spain will see another significant pay rise from January, albeit somewhat more moderate than in previous years. Although the final figure is still two months away, pensions will generally increase by around 2.6%, an average of 35 euros more per month on average, according to calculations made by SUR based on forecasts by financial think-tank Funcas. This is the smallest increase since 2022, two tenths of a percentage point lower than this year’s increase and a third of the 8.5% increase in 2023.
Starting in 2022, contributory pensions were set to automatically rise in line with the average inflation rate over the last 12 months, from December to November, without requiring the government of the day to approve the new increase. This is intended to provide financial security for the elderly and safeguard their purchasing power. With the final CPI (consumer price index) figure for September published yesterday, average inflation for the last ten months stands at 2.59% and will remain at this level at the end of November, according to Funcas estimates, which also forecasts a CPI of 3% in October and 2.8% in November.
With this expected 2.6% increase, the average pension in the system will increase by around 35 euros in January, bringing the average benefit to nearly 1,350 euros, a level that has never been exceeded until now. The approximately 6.5 million pensioners will receive slightly more each month, seeing their payouts increase by around 39 euros to around 1,550 euros a month (those registered with the general Social Security contributions scheme will exceed the 1,700-euro monthly threshold for the first time). They will thus have an extra 550 euros that will allow them to maintain purchasing power.
Self-employed retirees, however, will have to make do with a monthly increase of 26 euros, earning them 1,037 euros. The widow’s or widower’s pension will increase by an average of 24 euros to 960 euros. The permanent disability benefit will increase slightly more, by 31 euros per month to 1,241 euros. The orphan’s pension will increase by 13 euros to 539 euros per month and the family allowance will increase from 783 euros to 803 euros, an increase of 20 euros.
Still, there will be a group of pensioners who will experience a much larger increase than 2.6%. These are those who receive a minimum, non-contributory benefit, a total of 2.6 million people, whose payments will increase well above the CPI (consumer price index, inflation rate), as established in the pensions reform to improve the economic conditions of this most vulnerable group and guarantee them an income more in line with the cost of living.
Pension strain on public accounts
Although pensions will increase by 2.6% overall, the increase in system spending will double in 2026 and will skyrocket to 5.2% as more people are set to retire with larger pensions, which will mean finding an extra ten billion euros, according to Funcas.
The IMF estimates that the cumulative cost of pension increases up to 2050 will be around 650 billion euros
In this context, the International Monetary Fund (IMF) warns that the ageing of the population will put more strain on public finances in Spain than in other neighbouring countries. In its latest ‘Fiscal Monitor’ report, published twice-yearly, it calculates that the cumulative cost of increased spending on pensions up to 2050 is equivalent to 44.2% of Spain’s current GDP (gross domestic product), or around 650 billion euros without additional reforms. That amounts to almost half of all the wealth Spain generates in one year. This is four times the eurozone average and double its pre-pandemic estimates.
Furthermore, the IMF warns that Spain will increase its pension spending-to-GDP ratio to 0.7% between 2024 and 2030, twice that of neighbouring countries and three times more than the IMF estimated before the pandemic, in its October 2019 Fiscal Monitor report.