How much and why do the maximum contributions to Social Security rise to pay pensions

The Government proposes an increase of 8.6% for the maximum bases in line with the rise in pensions The rise in contributions represents an increase of 1,600 euros per year for the company for each worker, according to ATAYolanda Díaz accuses the president of the CEOE of having a problem with equality and “protecting the highest wage earners”So far, it is easy to understand. What many do not know is that pensions are paid with the social contributions paid by companies (to a greater extent) and workers each month. And that also goes up, but especially in the case of higher salaries: the Government has decided that their contribution will increase the same as pensions: 8.6%. Businessmen have branded this government decision as “inadmissible and unpresentable” via a statement this Friday. The Minister of Social Security was “surprised”. “Every year the maximum contribution bases go up”, commented José Luis Escrivá. “It is nothing new and it has surprised me because in 2013 and 2014 the maximum base rose 5% with negative inflation and I do not remember seeing a statement from anyone.” The economic vice president spoke along the same lines. “What is normal and usual is that the increase in maximum pensions is aligned with the increase in maximum contributions to guarantee the balance of the entire system,” Nadia Calviño emphasized at a press conference this Friday. In the CEOE the decision has been bad because it coincides with a moment of negotiation of the new leg of the pension reform. Deciding how much pensions and maximum contributions were going to rise was one of the points of the negotiation, they explain. But the unions, which just this Friday demonstrated before the employer’s headquarters in Madrid, have given another version: the rise in contributions is ordinary and “has never been consulted.” “If pensions go up, the contribution bases have to go up to be able to pay the pensions,” said the general secretary of the UGT, Pepe Álvarez, and recalled that the employers signed the agreement to revalue pensions according to the CPI. Yolanda Díaz has accused the CEOE of having a problem with equality. “Mr. Garamendi (president of the CEOE) does not like equality. He wants to continue protecting the highest wage incomes.” The increase occurs in a context of still great uncertainty for companies and rising costs for raw materials. The rise in contributions proposed by the Government represents an increase of 1,600 euros per year for a company for each worker with a salary of more than 50,000 euros per year. The employee will contribute 350 euros more per year to the system, according to the calculations of the Association of Autonomous Workers (ATA). “In the situation in which companies and the Spanish economy are, talking about a 9% increase in labor costs is, of course, the worst news,” said Lorenzo Amor, president of ATA. Income from social contributions rose by almost 11, 5% The entry for income from social contributions is one of the items that has risen the most on the income side of the State budgets presented this week. Specifically, the Government expects 152,075 million euros, 11.5% more. “This growth is influenced by the increase in the maximum contribution bases and by the current economic growth framework,” explains the budget project. “If pensions rise 8.5%, the maximum contributions will be in that range. It is a of the matters that are being discussed with Brussels”, the Minister of Finance explained yesterday when asked about the issue. The maximum bases have had low increases in recent years: last year 1.7% and the previous two were frozen. In contrast, the minimum base has risen more in recent years due to the increase in the minimum interprofessional salary (SMI) that has gone from 735 euros per month in 2018 to 1,000 euros in 2022. It is for this reason, and given the context of high inflation, for which the Government has decided to raise the contributions for the highest salaries in line with the revaluation of pensions.