In May 2024, Spanish pensioners received payments that recently seemed out of reach. The average pension across the country reached €1,254.3, a 5% increase compared to the previous year. Over two decades, this figure has nearly doubled: in 2005, the average pension barely exceeded €686. Payments are now approaching the €1,500 mark, and pension expenses continue to rise.
The total amount allocated monthly for pensions has reached €12.7 billion, already accounting for 11.5% of Spain’s entire GDP. The largest share goes to old-age pensions—over €9.3 billion. Other categories, such as survivor’s, disability, orphan, and family pensions, together amount to about €3.4 billion.
Trends in the number of pensioners
The number of pension recipients in Spain is steadily rising. In 2005, there were just over 7.3 million; by 2024, this figure had surpassed 9.1 million. Men and women are almost equally represented: 4.64 million and 4.55 million, respectively. Every month sees new pensioners join these ranks, inevitably increasing the strain on the budget.
But it’s not just the numbers driving up costs. The size of payments has also grown substantially. Over twenty years, the average pension rose by 109.83%. In 2005, pensioners received €686.98, while in May 2024 it was already €1,441.5—a difference of €754.52. Year after year, the sums went up, sometimes sharply, sometimes gradually, but always climbing.
Rising payments and budget expenditures
Each pension increase impacts the state budget. In 2005, pension payments amounted to €79.2 billion. By 2023, this figure had nearly tripled to €190.7 billion. Funding the pension system has become one of the country’s largest expenditure items.
To cover these costs, not only the current budget is used, but also the so-called “piggy bank”—the Social Security Reserve Fund. It is from this fund that additional payments are made in July and December. However, in recent years this fund has shrunk significantly: while in 2011 it held €66.8 billion, by 2024 only €2.15 billion remained. By comparison, in 2005 the reserve contained €27.2 billion.
Changes in indexation
Since 2022, a new pension indexation system has been in place in Spain. Now, payments are adjusted annually in line with the previous year’s inflation. This measure preserves pensioners’ purchasing power, whereas earlier indexation did not always keep pace with rising prices. Thanks to this reform, pensions have grown faster, which is especially apparent against the backdrop of recent inflation spikes.
The table showing pension growth over the past 20 years reflects how payouts have changed: from €686.98 in 2005 to €1,441.5 in 2024. Each year saw an increase—sometimes modest, sometimes more significant. For example, in 2019 the average pension was €1,137.71, and just five years later, it was €300 higher.
System debt and deficit
However, there is a flip side to this. Over the past 20 years, the social security system’s debt has risen from 18.3 billion euros to 116.2 billion. The pension fund’s deficit and surplus have fluctuated year by year: there were periods with a positive balance, but recent years have more often seen a deficit. In 2020, the deficit reached 2.2 billion euros, in 2023 it fell to 196 million, and in 2024 the system returned to a surplus of 550 million.
Spain’s pension system continues to evolve, adapting to demographic and economic challenges. The growing number of retirees, increased payments, and shrinking reserves are shaping a new reality for millions across the country.
