The Spanish public pension system may present an improvement in terms of economic, financial, and actuarial sustainability until 2050 and, at the same time, register a deterioration of its financial balance. This is one of the main conclusions of the study prepared by José Enrique Devesa, Inmaculada Domínguez, Borja Encinas, and Robert Meneu for FEDEA based on the projections of the Ageing Report 2024 from the European Commission.
The work, published by FEDEA in September 2026, uses the projections made for the 2024 European report and builds on them an indicator that relates, for a theoretical cohort, the value of contributions made during working life with that of the pensions received. The authors warn that this is a theoretical indicator, constructed from projected variables and not from actual administrative histories.
The apparent good news has relevant small print. According to the calculations of the study, the Spanish sustainability indicator would go from 1.34 in 2022 to 0.90 in 2050, which represents an improvement. But that same scenario contemplates that the financial balance of the system worsens: the deficit would go from 0.2% of GDP in 2022 to 2.7% in 2050. The reason is that both indicators measure different realities: while the first compares contributions and benefits throughout the life cycle of a cohort, the second confronts the income and expenses of each fiscal year.
It is precisely in that difference where economists find one of the keys of the document. The actuarial improvement does not mean that the financial problem of pensions disappears. The study itself concludes that the Spanish system will face financial difficulties in the future as a consequence of demographic aging, although, under the hypotheses of the Ageing Report, it moves towards greater structural sustainability.
The pension will go from 77.2% to 64.6% of the last salary
One of the elements that most contributes to that improvement is, precisely, the expected reduction of the initial pension in relation to the last salary. The Ageing Report 2024 projects that the Spanish replacement rate —the relationship between the first contributory retirement pension and the last salary— will go from 77.2% in 2022 to 64.6% in 2050. This is 12.6 percentage points less.
The FEDEA study highlights that Spain is, among the five countries analyzed in depth -Spain, Germany, France, the Netherlands, and Sweden-, where this rate falls the most.
The authors find the result particularly striking because the Spanish reform of 2021-2023 did not substantially modify the calculation of the initial pension. The Ageing Report attributes a large part of the evolution to the fact that more and more pensions would be limited by a maximum pension that will grow less than the maximum contribution bases.
According to the Spanish sheet used by the authors, the maximum contribution base would grow on average 1.2 percentage points above the CPI, while the maximum pension would grow 0.115 points above the CPI.
This difference means that an increasing proportion of new pensions is capped by the maximum amount. The researchers believe that the magnitude of this drop in the replacement rate could constitute one of the excessively optimistic assumptions that favor the sustainability outcome.
In statements to DEMÓCRATA, he focuses precisely on the need not to read the sustainability indicator in isolation and to analyze the hypotheses that allow reaching that result. The researcher is part of the team that has prepared the study along with Inmaculada Domínguez, Borja Encinas, and Robert Meneu.
FEDEA summarizes the main caution of the work by pointing out that the expected improvement for Spain depends on assumptions about the replacement rate, the effective retirement age, the interest rate, and the duration of the working career that the authors consider "excessively optimistic".
A later retirement that the authors consider difficult to project
The second major element contributing to the actuarial improvement is the evolution of the effective retirement age. The scenario used by the Ageing Report projects a strong increase in labor activity among those over 55 years old.
Between 2022 and 2050, the activity rate would increase more than 12 points among those over 55 years old; in the group of 65 to 74 years old, the expected increase reaches 12.4 points, the highest among the analyzed countries.
The authors question the magnitude of this evolution. According to the study, the assumptions used to estimate how changes in retirement incentives affect exits from the labor market between the ages of 51 and 74 can be described as "very optimistic." In their view, this scenario could be overestimating the effective retirement age in Spain compared to other European countries.
The issue is relevant because a later retirement implies more years of contributions and fewer years of receiving the pension, two elements that automatically improve the actuarial indicator. The study projects that the average working career of new workers will increase 2.6 years between 2022 and 2050, or 2.1 years once the actuarial adjustment and wage growth are applied.
The Spanish legal calendar also introduces a limit that the authors take into account in their projections. From 2027, the ordinary age will be 65 years for those who have 38 years and six months or more of contributions, and 67 years for those who do not reach that period. Social Security maintains this scheme as the culmination of the gradual increase in the retirement age.
The contributory effort increases, but so does the deficit
The third element is the reinforcement of revenues. The reforms approved since 2021 incorporate the Intergenerational Equity Mechanism, the solidarity contribution, the increase of maximum bases, greater contributions from the State, and the reform of the contributions of self-employed workers.
The study calculates that the implicit effective contribution rate will increase 5.9 points in Spain between 2022 and 2050, above the projected increases for the Netherlands, Germany, Sweden, and France.
In terms of GDP, contributions destined for the system would increase 1.7 points between 2022 and 2050. It is one of the elements that explain the improvement of the actuarial indicator. But this increase in revenues does not prevent the annual balance from worsening, mainly due to the impact of the retirement of the largest generations and the aging of the population.
The result is, therefore, one of the paradoxes that run through the study: the system may be more balanced in actuarial terms for one cohort and yet require more resources to meet its obligations year after year.
In fact, the Ageing Report projects for Spain an increase of 4.19 GDP points in pension spending between 2022 and 2050, the largest increase in the EU. The purely demographic effect would be even greater: 10.36 GDP points, compared to the 5.2 points of the European average. The difference is explained by the factors that partially offset aging, including the lower replacement rate, the evolution of coverage, and the greater labor participation of older workers.
FEDEA had already called for more transparency regarding forecasts
The cautions about the hypotheses used in the Ageing Report are not new within FEDEA. In 2024, Ángel de la Fuente, executive director of FEDEA, analyzed the Spanish projections of the Ageing Report 2024 and demanded that the Ministry of Economy publish a technical annex with a complete description of the models used, the way in which the various measures of the pension reform had been incorporated, and the detailed data and results used to prepare the forecasts.
De la Fuente pointed out then that the European document did not offer a sufficiently detailed methodology to replicate or assess its projections and considered it especially important to have that information due to the consequences that its results could have on the evaluation of the sustainability of the system.
Two years later, the new work of FEDEA again focuses on the hypotheses that support the projected evolution. The authors themselves warn that the improvement of the indicator largely depends on the drop in the replacement rate, the increase in the effective retirement age, the rise in contributions, and a longer working career. In their conclusions, they describe as "excessively optimistic" some of the assumptions used to measure the effects of the reforms on early and delayed retirement and on the evolution of the maximum pension concerning the maximum contribution base.
For this reason, the complete reading of the document does not allow one to only focus on the fact that the actuarial indicator improves. The study itself contrasts that improvement with a deterioration of the financial balance and warns that the result is conditioned by the hypotheses used. Under the projections of the Ageing Report 2024, Spain would move towards greater structural sustainability; if those hypotheses about retirement, working career, contributions, and replacement rate are not met to the expected extent, the conclusion could vary.