The reality of the demographic pyramid prevails. And few pieces of evidence are as graphic as the data revealed recently by the National Institute of Statistics (INE) and the Ministry of Social Security: in Spain, more people are retiring than babies are being born. For the second consecutive year, new retirement enrollments exceed the number of births. A trend that threatens to consolidate despite the slight increase in birth rates because the baby boom generation is just beginning to enter the public pension system.
The massive retirement wave is yet to come. In Spain, the bulk of the retirement of baby boomers will occur from 2027 onwards, as the largest cohorts born between 1960 and 1975, approximately, start to retire. But the arrival has begun, as confirmed by the data from the end of 2024, with 368,065 new retirement enrollments recorded in Social Security, a 12.6% increase from the previous year and, undoubtedly, a historical high.
During the same period, as confirmed by the INE last week, 322,034 babies were born in Spain. In other words, there were 46,031 more retirements than births. The gap is widening, as in 2023, the first year in which retirement enrollments exceeded births, there were 326,949 retirees compared to 320,656 births. Statistics show that although in 2024 birth rates increased for the first time in the last decade, it was only by 0.4%. The pace of retirement enrollments was 30 times higher, multiplying the gap between new retirees and babies by seven in a year, increasing from nearly 6,300 to over 46,000.
Faced with this situation, economist Javier Santacruz warns that the excess of retirees over births is occurring "at the expense of, at least, one and a half generations, as the new retiree will consume resources that the child born today will start to pay for 22 years later." "Each new birth carries a very significant generational burden, which is partly cushioned by the increases in contributions in recent years. However, the deficit in the fund increases the real debt of Social Security and, therefore, the expenses on pensions for this excess of retirees over births are financed by the contributions that the newborn today will generate in 22 years," he explains.
Alongside the increases in social contributions, through the Intergenerational Equity Mechanism (MEI) paid by all workers since 2023 or the solidarity fee that Social Security has started collecting from higher salaries this year, the Government, in the reform designed by former minister José Luis Escrivá - current Governor of the Bank of Spain - introduced a comprehensive package of measures to contain pension expenses aimed at delaying the effective retirement age. On one hand, early retirement was penalized, and on the other, a series of incentives for delayed retirement were introduced.
Two years after the implementation of the new regulatory framework, the department now led by Elma Saiz believes that it is beginning to bear fruit. In the explanatory note of the February pension payroll, released yesterday, the Ministry highlights that "the number of early retirements has significantly decreased and is below 30% of the total (29.6%)". Specifically, in 2024, there were 108,968 early retirements, a 10.4% decrease compared to 2019 when 40% of new retirements were early.
In parallel, 9.3% of the enrollments in 2024 corresponded to delayed retirement, compared to 4.8% in 2019. There were a total of 34,273 enrollments of this type, while in 2019 they barely exceeded 14,000. "As a result of the increase in people voluntarily delaying retirement and the decrease in early retirements, the average retirement age is 65.2 years, compared to 64.4 in 2019," Social Security adds.
However, expenses continue to grow at a rate that has raised alarms in most national and international oversight bodies, including the European Commission, which has anticipated the need for a ¤12 billion adjustment because, in their view, the new mechanisms to delay the effective retirement age and increase system revenues only partially offset the indexing of pensions to the CPI and the increase in expenses due to the aging population and the higher salary levels of workers currently leaving the labor market.
In the February payroll, for the first time, the average retirement pension has exceeded ¤1,500 per month, while the average new enrollments in the system now reach ¤1,754.2 per month. Overall, retirement pensions account for three-quarters of the payroll (73.2%, to be precise), over ¤9.848 billion out of a total of ¤13.455.6 million paid this month to more than 9.3 million recipients of retirement, permanent disability, widowhood, orphanhood, and family pensions.