Spain's Pension Gap Persists Despite Baby Boomer Retirement

The retirement of the last baby boomers will not restore balance to the system: Spain's demographic structure remains permanently aged. UBS and the European Commission project that the dependency ratio will nearly double between 2025 and 2080, with a fertility rate of 1.11 children per woman in 2025.

There is a comfortable idea circulating in pension discussions: that the problem is a mountain, the baby boomers, and that once the peak is passed, the system will return to its place on its own. The largest generation retires, collects benefits, dies, and smaller cohorts trinc, supposedly alleviating the burden. It sounds orderly. The problem is that the numbers do not support this sequence.

UBS has published a Global Research report titled 'Demographic Change and Ageing: How Can We Navigate the Great Transition?' which argues just the opposite: demographic pressures do not disappear when the baby boom ends. Behind that wave come increasingly smaller generations of workers, immigration has limits, and older people live longer. Reinhard Cluse, the economist who led the work, summarizes it with an uncomfortable question: countries with large waves of retirements may wonder if pressures will diminish after that hump is overcome. The answer, he says, is instructive.

## Fertility That Does Not Replace

The starting point is fertility. Spain hovers around **1.2 children per woman**, according to UN projections cited by UBS. The generational replacement threshold, without immigration, is at **2.1**. This gap is not a temporary bump: if fertility remains persistently below 2.1, each successive generation will be smaller than the previous one. It is arithmetic, not pessimism.

The European Commission uses an even lower figure in its '2027 Ageing Report: Underlying Assumptions and Projection Methodologies', published in May 2026: it starts from **1.11 children per woman in Spain in 2025** and projects an increase to **1.34 in 2080**. That scenario is optimistic, and yet it remains far from replacement level. With these foundations, the pay-as-you-go system—where current workers' contributions fund retirees' pensions—faces pressure that does not end with one generation.

The old-age dependency ratio measures the population aged 65 or over relative to those aged 15 to 64. According to UBS, in Spain it would rise from **32.9% in 2025 to 45.4% in 2035**. Translated into daily life: going from approximately three working-age people for every person over 65 to barely 2.2 in just a decade. It is not the same as the actual number of contributors per pensioner, but it is quite close.

## A Century of Aging

Brussels' projections extend the view to 2080, and the outlook does not improve. Spain's old-age dependency ratio would nearly double between 2025 and 2080, from **34.3% to 69.7%**. Put another way: from almost three people aged 20 to 64 for every inhabitant over 65 to barely 1.4. The Spanish increase is **35.4 percentage points**, compared to the EU average of **26.5 points**. Spain ages much faster than its partners.

Another relationship perhaps explains the challenge better. In 2025, Spain had about **45.5 inactive people over 65 for every 100 employed workers aged 20 to 64**. By 2080, that proportion will skyrocket to **86.5**, practically doubling. For every ten workers, there will be nearly nine inactive elderly people, compared to four or five today. This is one of the worst deteriorations in the entire EU, with an increase of 41 percentage points. Italy, one of the continent's most aged countries, will reach 90%.

The National Statistics Institute (INE) points in the same direction with its demographic projections for 2024-2074. The population aged 65 or over, which represented **20.4% of the total** at the start of the period, would reach a maximum of **30.5% around 2055**. In 2074, half a century later, the elderly would still account for **30.3%**. There is virtually no retreat in the weight of potential retirees, although by then the vast majority of baby boomers would have died. The total dependency ratio, which also includes those under 16, would reach **75.3% in 2052** and barely drop to **73.9% in 2074**. The INE reminds us that these are scenarios conditioned by hypotheses, not inevitable predictions, but the message is hard to dodge: it is not a mountain to pass, but a plateau.

## More Inhabitants, Worse Proportion

Here appears a paradox worth understanding. The European Commission predicts that Spain's population will grow from **49.3 million inhabitants in 2025 to 51.6 million in 2080**, a growth of **5%**, while the EU as a whole will lose **8%** of its inhabitants. Spain gains people and, nonetheless, ages intensely. The issue is not how many live in the country, but their age and participation in the labor market.

Immigration alleviates some tension, but it is not an automatic solution. The INE predicts Spain will reach **54.6 million inhabitants in 2074**, despite deaths exceeding births throughout the projected period, because positive net migration would compensate for negative natural growth. UBS warns that compensating for aging through this route would require large and sustained population inflows for a long time, something complicated in practice and politically. And there is a detail often forgotten: immigrants arriving in Spain are increasingly older, according to a recent study by Funcas. Those workers will also retire.

Longevity does the rest. UBS notes that global life expectancy has increased by **8.4 years since 1995** and the trend will continue. Spain, with a life expectancy near **84 years**, ranks among the longest-lived countries on the planet; Eurostat places that jump from 75 years in 1980. Brussels calculates that life expectancy at birth for Spanish women will rise from **86.6 years in 2025 to 91.4 in 2080**, and for men from **81.5 to 87.5**. If someone retires at 65 and lives to 85 or 90, the system funds their benefit for two decades or more. The effect multiplies when the cohorts reaching retirement are huge.

## The Bill Already Being Paid

There is no need to wait until 2050 to see the imbalance. Today, with record employment in Spain and the economy growing triple the eurozone rate, the State needs to inject about **€60 billion annually** to cover the difference between social contribution revenues and pension spending. Imagine what would happen if the macroeconomic situation were not so buoyant. New retirees receive on average double what they contributed during their lifetime to fund their pension, a result of rapid increases in life expectancy without equivalent rises in retirement age.

The Independent Fiscal Responsibility Authority (AIReF) puts figures to what lies ahead. In its assessment published in May 2026, it estimates that public spending on pensions will reach **16.4% of GDP in 2050**, compared to **13% in 2025**: an increase of 3.4 percentage points for accounts already bearing high debt levels. Average gross pension spending between 2022 and 2050 will represent **14.5% of GDP**. Revenue measures allow formal compliance with fiscal rules, but that does not miccionan pressures have disappeared. AIReF already warned in its previous assessment that no improvement in the public pension system is observed in dynamic terms.

And there is the debt. In its constant policies scenario from March 2025, AIReF contemplates that public debt will reach **129% of GDP in 2050** and **181% in 2070** due to the combined pressures on public finances. If with much lower levels Spain was on the verge of losing market access, with such debt and a more demanding financial environment, the situation could be worse.

There is room for improvement that Brussels also notes: the Commission has revised its employment projections upward and anticipates that Spain will have around **1.9 million more employed people in 2070** than calculated in the 2024 exercise, thanks to more favorable demographic prospects and higher labor participation. It helps, but the projections themselves show it is not enough to prevent the deterioration of the worker-to-elderly ratio.

UBS proposes combining higher labor participation, longer professional careers, pension system reforms—looking at Denmark, Sweden, or the Netherlands management—immigration, and productivity improvements. Countries that act early will be better positioned to remain prosperous despite demographic obstacles, the bank concludes. The alternative is trusting that time will fix it, and according to the data, time has no intention of doing so. This is economic analysis and projection over decades; any personal decision regarding retirement or savings should be consulted with a professional.