The Government warns of people who will pay more every time pensions rise
Maximum contributions will begin to be regulated. Until now there was no rule that determined the adjustment, but the minister José Luis Escrivá considers that the time has come to set a series of conditions for the increases.
The contributions are the money that both the companies and the worker contribute to the system monthly to pay them pensions. The intention of the Executive is that they rise by a percentage very similar to that of the pensionswhich are currently subject to the CPI. The head of the Treasury estimated that the increase in these payments would reach 8.5% from January.
Escrivá explains that "we have always maintained that the maximum bases must rise as well as the CPI". According to his opinion, what is done with this measure is to "provide predictability".
How will this affect businesses and workers?
Does this mean that companies have to contribute 100 euros more per month for each employee? Actually, no. They only have the obligation in the case of those who receive more than 50,000 euros per year, it is to these that the maximum base is applied.
In addition to the companies, the worker himself will also have to make an effort. It will contribute another 20 euros per month to the system. The manager of the portfolio of National InsuranceInclusion and Migrations insists on the need for there to be "a rule", stresses that "the maximum bases must rise at least the same as the pensions". It is worth noting that the updates in recent years have been quite confusing and out of touch with inflation. Both 2020 and 2021 remained frozen.
After the criticism of employers for this position adopted, the minister wanted to send them a message. "Sometimes we forget how much income she has given up National Insurance to protect companies", he said.
The proposal to raise the maximum contributions by 8.5% represents the highest percentage in a long time. Escrivá explained that "the most logical thing is that we all seek sustainability. This means that income and expenses must rise in unison."
He understands that if he did not act responsibly "we would be weakening Social Security" and this, among other things, would cause more public debt and deficit. The cost of raising them pensions according to the IPC it will involve a disbursement for the State of more than 12,000 million euros.
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Complaints from employers
The decision to increase the maximum contributions will allow the State to enter an extra 600 million euros. The employers' association CEOE did not take long to react last Friday issuing a statement in which they considered the measure "inadmissible".
But it will not be the only additional cost that companies will face from 2023. Next year a new surcharge will be launched, the MEI (Intergenerational Equity Mechanism), which will force companies and employees to pay 0.6 % more social contributions to fill the piggy bank of the pensions.
This is intended to be as prepared as possible for the next withdrawal of the 'baby boom' generation. Without a doubt, it will be a very stressful time for the system. Employers also do not see it as an appropriate thing to understand that this solution does not fix the problem.
A climb at the worst time
The increase in social contributions comes at the least opportune time. Companies are victims of the economic slowdown and a deep energy crisis and have also suffered from the increase in the cost of raw materials.
The employer maintains that if all this is added to the higher payment for contributions, their accounts will end up being squeezed even more. Escrivá defends that the companies are transferring the increase in costs to the prices of their products, therefore, the situation is not so serious.