Record Retirement Pension Payments and an Unprecedented Deficit: The State’s Ongoing Efforts to Sustain its Pension System

The retirement pension in June 2023 was the highest it has ever been, reaching over 1,600 euros for the first time. The average pension payment in June was also higher by 5%, to 1,254.6 euros, and the extra payment received by over 10 million pensioners averaged around 1,224.6 euros, a 4.9% increase from the previous year. Despite these increases, Social Security had to allocate more than double the State’s defense budget in just one month to pay its contributors.

The total disbursement for June was a staggering 25,171.5 million euros, which is significantly larger than other items in the General State Budget. In comparison to previous years, this amount is four times what was paid out in 2005 and double what was paid out in June 2015. The annual revaluation of pensions has contributed to this growth rate, with an increase of 8.5% set for 2023 alone.

Despite ongoing deficits and rising costs, Social Security continues to receive transfers from the Central Administration to support its pension system operations. The Intergenerational Equity Mechanism has accumulated over 7 billion euros in the Reserve fund so far, which is aimed at addressing future challenges in the pension system and ensuring that retirees are able to live comfortably throughout their golden years. By the end of this year, it is expected that this fund will exceed nine billion euros.