Spanish Social Security system to allocate 151.49 billion euros to families directly, a 6.7% increase

The Minister for Work, Migration and Social Security, Magdalena Valerio, presented the Social Security Budget for 2019 on Thursday morning, which amounts to 151.49 billion euros. The most significant figure was a 6.7% increase in spending on benefits given to Spanish families directly.

The largest heading in the budget corresponds to contributory pensions, with a 6.4% increase on last year and a total of 135.27 billion euros (10.8% of forecast GDP).

In terms of revenue, forecasts by the Spanish Social Security system expect a total of 123.59 billion euros from National Insurance contributions. This is an increase of 7.5% on 2018 and accounts for 77.14% of all revenue.
The consolidated Spanish Social Security budget for 2019 amounts to 164.67 billion euros.

More social protection

The Spanish social protection system will have 151.49 billion euros available for pensions, temporary incapacity benefits, family benefits, maternity and paternity benefits, and all other benefits paid out by the system. This figure represents an increase of 6.7% on 2018.

In a summary of the most significant changes in the budget for 2019, it is worth noting those contained in Spanish Royal Decree-Law 28/2018, of 28 December, on returning to the maintenance of pension purchasing power, as it provides for the compensation of a possible deviation from the CPI while raising pensions by 1.6% across the board and by 3% for minimum and non-contributory pensions.

The percentage applied for the calculation of widowhood pensions received by the over 65 will also be increased by 4% up to 60% of the contribution base. Hence, the calculation basis for widowhood pensions will be increased by eight points; four in 2018 and another four in 2019.

The text also recognises the reduction coefficient of the retirement age for members of the Spanish Local Police forces in exchange for an increase in contributions from these individuals aimed at maintaining balance in the system. Workers of industrial companies will also be eligible for partial retirement when this is tied to a substitution contract. The two measures seek to rejuvenate the workforce while guaranteeing the rights and social protection of workers.

The budget also includes an increase to eight weeks for paternity leave in 2019, to which has been allocated a total of 825.1 million euros. This measure comes in response to the Government of Spain's commitment to improving work-life balance for families and fostering gender equality.

In terms of family benefits, it is worth noting the 16% increase per dependent child to 341 euros. This will rise to 588 euros in cases of extreme poverty. The total amount allocated under this heading stands at 1.86 billion euros.

Protection for orphans under the Pact against Gender-based Violence will also receive an additional 4.9 million euros.
Spending on temporary incapacity benefits is the next largest heading, with a total of 8.64 billion euros. This heading has increased by 8.24% in line with the increase in employment.

A total of 7.33 billion euros has been allocated to the minimum pension complement this year, which provides a guarantee to receive the minimum pension established each year for each situation under established requirements.
In December last year, more than 2,377,173 people received pensions that included this complement (24.5% of the total), of which 65% are women.

Revenue from contributions increases by 7.5%

Revenue from contributions is the main source of funding for the Spanish Social Security system. This figure is expected to reach 123.58 billion euros for 2019, an increase of 7.5% on the previous year, and will cover 77.1 of the total budget.

The increase stems from several factors, such as the increase to the minimum inter-professional salary (which stands at 900 euros/month in 2019, up 22.3%) leading to a similar increase in the minimum contribution bases. The maximum contribution bases have also increased by 7%. In this regard, it is worth noting the agreement within the Regime for Self-Employed Workers that has allowed the contribution rate from these workers to be increased to 30% and compulsory contributions for professional contingencies and cessation of activity. The minimum contribution base for self-employed worker has increased by 1.25% this year.

The figure of non-professional carer is also reinstated this year. These are people who provide long-term care to dependent relatives. This will yield 315 million euros in National Insurance contributions paid by the State.

Another new feature for the budget this year is an increase to the unemployment benefits paid to workers aged between 52 and 55. The retirement contribution will be paid by the State Public Employment Service in these cases, and will be equal to 125% of the minimum contribution base.

The draft budget also includes other measures of lesser impact but that will help improve revenue and social protection. These include contributions by university students on internships or the signing of special agreements for workers with short contribution histories and the increased contributions in contracts lasting less than seven days.

As was the case in the last two years, the Spanish Social Security system will receive a loan from the State. That loan amounts to 15.16 billion euros this year and will be complemented by a transfer of 850 million euros to support budget sustainability in the Spanish Social Security system. The two transfers will allow budgetary balance to be maintained this year and provide adequate coverage for Social Security expenses.

Non official translation