Brussels projects 42.6 years of contributions for a full pension

Contributing four more years to retire without cuts: Brussels' calculation

A 62-year-old worker does the math and reaches an uncomfortable conclusion: they will receive more by retiring early than by staying in the workforce for a couple more years. That case sums up the knot of a system that already projects working careers of more than four decades. Brussels has put a figure on the stretch: Spaniards will need to prove 42 years and 7 months of contributions to receive a full pension at the ordinary retirement age, currently set at 65.

The data is in the latest Ageing Report, the report with which the European Commission measures the health of pensions. Spain appears as the second country where working life will lengthen the most. Only Slovakia, with an average of 45 years and 8 months, exceeds the Spanish figure. Current regulations allow retirement at 65 with 38 or more years of contributions; the 2011 reform set a path that would culminate in 38.5. The new scenario adds almost four and a half years to that count.

From 38.4 to 42.6 years of contributions: how careers stretch across generations

The lengthening does not happen all at once. It is distributed by cohorts, and each one carries a little more than the previous. Those born between 1965 and 1975, the baby boom generation that will retire in the 2030s, will average between 38.4 and 39.4 years. Those born between 1976 and 1985 will accumulate between 39.4 and 40.4. Millennials, up to 1995, will range between 40.4 and 41.4. And Generation Z, those who entered the labor market later, will need between 41.5 and 42.6 years to avoid seeing their benefit reduced.

• Baby boom (1965-1975): 38.4 to 39.4 years of contributions
• Generation X (1976-1985): 39.4 to 40.4 years
• Millennials (1986-1995): 40.4 to 41.4 years
• Generation Z (1996-2005): 41.5 to 42.6 years

The push comes, according to the report, from an "especially strong" increase in women's careers, which are converging toward male levels, and from the continued delay of the legal retirement age. And what about those who don't reach those years? They can retire earlier. With the pension reduced by reduction coefficients.

15.1% of GDP on pensions and the demographic peak of the 2030s

Without demography, the picture doesn't make sense. Spending associated with aging will be around 15.1% of GDP on average until 2050. What drives that figure is the dependency ratio, the relationship between people over 65 and the working-age population, 16 to 64. When the bulk of the baby boom retires in the 2030s, that indicator will add 4.4 percentage points of GDP to spending.

The phenomenon is continental: average careers will grow by about two years in the eurozone. Greece marks the extreme, with a jump from 31.9 to 38.4 years. Portugal, Slovakia, and Romania will add another four. Spain and Greece are singled out for the strong increase in their working lives.

Unions, politics, and intergenerational reproach

From here on, economic analysis gives way to anger. One current holds that unions, financed with public money, will not lift a finger for a reform that lengthens working life, and that they only bring their people out onto the streets when the adversary is in government. On the other side, another reading points upward: the blame is not on the leadership, but on a majority that swallows it without mounting a strike worthy of the name.

The most repeated reproach is generational. It is claimed that many current retirees, aged 70 or older, received a portion of their salary in undeclared cash for decades, without contributing for it, and retired early with pensions higher than their children's salaries. Against that narrative, some recall that social contributions have been operating since 1967 and that income tax arrived with the Transition, with high brackets of up to 65%. Who paid what remains without an arbiter.

Paid-off housing, savings, and the margin each person has left

Among those around fifty who do not expect much from the public system, the plan B is twofold. First, a cushion of real savings, without depending on a future pension that no one guarantees. Second, having one's homework done: a home already paid off and, if possible, a second one to rent out and secure fixed income.

Self-employed workers enter here with their own figures. Their pensions tend to be low and the complaint is constant, although it is barely remembered that if a self-employed person does not contribute, they do not receive. And a calculation circulates, broken down item by item, comparing a salary of 3.5 million pesetas in 1994 with its current equivalent, about 42,000 euros, to argue that three decades ago people earned more than now. The maximum retirement pension, however, is now 3,059 euros per month.

The average retirement age in Spain already exceeds 65 for the first time in history, driven by penalties for early retirement and incentives to delay it. The Government plans to raise it to 66 years and 7 months, to alleviate 1.4 percentage points of GDP in spending. With those figures on the table, the question is no longer when to retire. It is who can hold out until then.