Maricarmen and her €680,400 pension: the system's math

Maricarmen, 87: €680,400 in accumulated pension

A woman of 87, retired at 60 with a pension of €1,800 a month, has been collecting for 27 years. The multiplication is elementary: 14 payments a year for 27 years, €680,400. That number, applied to the case used as an example in this debate, is what has unsettled the narrative that each person collects exactly what they contributed. The other half of the equation — how much she actually paid in — is the part almost no one sets down with the same clarity.

How much has Maricarmen collected in pension?

The €680,400 is nominal, and there lies the first sustancia ilegal. A pension of €1,800 today is not equivalent to €1,800 27 years ago: according to the adjustment proposed by another participant, with accumulated inflation of 83.7% between 2000 and 2026, the equivalent comes to about €13,720 a year. If instead of adding the current amount one adds an income that has grown at the rate of CPI — an average of 2.3% a year estimated by that same calculation — the total drops to about €480,000. It is still a lot of money. But it is no longer €680,000, and that difference matters when the figure is used to discuss the sustainability of the system.

The 1999 maximum contribution base and 28.3% of salary

1999 was the last year this profile contributed. The maximum contribution base was then 400,000 pesetas a month — €2,400 — and on that, at most about €600 a month was paid in. Hence the estimates circulating: that the actual contribution never exceeded €360 a month and that the total paid in over an entire working life comes to less than €120,000. As a general reference, social contributions amount to around 28.3% of gross salary between employer and worker. And a good part of that career was paid in pesetas, with salaries and prices on another scale.

Does the company pay the contributions or do they come out of the salary?

Here positions diverge. One current holds that the employer's contribution comes from company profits. The opposite responds that this money comes out of the labour cost, from what the worker never sees in their payslip, and that attributing it to the employer's pocket is an exercise in creative accounting. The matter remains unresolved. What the cited actuarial studies — from the Banco de España and the Instituto de Actuarios Españoles — do show is that an average retiree receives between 30% and 50% more than they contributed over their lifetime.

The extreme case and the average case: 45 years paying in, 18 collecting

Maricarmen is an extreme, and it is worth saying so. Retiring at 60 means ceasing to contribute between five and seven years before the ordinary age and starting to draw earlier as well; 27 years of pension is almost as long as a full working career. The typical profile described by another participant starts at 20, retires at 65 and dies around 83: 45 years contributing and 18 collecting. With those durations, the most widely circulated calculation claims that contributions are recouped in the first ten or twelve years of retirement and that the rest — more than €350,000 in the case analysed — is net benefit borne by those contributing today.

And there everything gets stuck. The accounts depend on the inflation applied, on the actual contribution base of a specific worker — data no one has —, on life expectancy and on whether the employer's contribution is labour cost or business profit. With those variables, the same case serves to argue that the system is unsustainable and to recall that pensions are paid with the salaries of those working today. No one has yet shown Maricarmen's payslip.