Spain's effective retirement age hits record high of 65.5 years as pension spending surges

Retirement

Government incentives designed to delay retirement narrow the gap with the official state pension age but fail to stop monthly welfare costs soaring to over 14 billion euros

Wendy Dávila

Madrid

SPAIN’S effective retirement age has hit a record high of 65.5 years for the first time, driven by government incentives designed to delay ... workers leaving the workforce.

The figures for May show the actual retirement age has deferred by more than a year since 2019, narrowing the gap with the country's official state pension age which currently sits at 66 years and ten months.

However, the delay has failed to curb rising state costs. Spain's total pension expenditure surged to a record14.37 billion euros in May - a 6.1 per cent increase compared to the same month last year.

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The shift follows a series of state pension reforms introduced in 2021. The measures gradually raise the standard retirement age to 67 by 2027 for those with insufficient career contributions, while offering financial incentives for voluntary delayed retirement.

The strategy appears to be working, with voluntarily deferred retirements accounting for 12.3 per cent of the 126,643 new pensions registered in May. This represents a significant rise from the 4.8 per cent recorded in 2019. Meanwhile, 69 per cent of new retirees opted to work until the official age of 66 years and ten months.

Spending has also been driven up by a government-approved 2.7 per cent inflation-linked pension increase for this year.The average monthly retirement pension across Spain now stands at 1,572 euros, up 4.4 per cent year-on-year. For those newly entering retirement, the average monthly payout reached 1,644.10 euros.

Significant disparities remain across different sectors. The average monthly retirement pension for general scheme workers reached 1,731.70 euros, compared to just 1,060 euros for the self-employed. Retired coal miners received the highest average payouts at 3,003.90 euros per month.

In total, the Spanish social security system funded nearly 10.5 million pensions for 9.5 million citizens in May, with approximately three-quarters of the multi-billion euro budget allocated directly to retirement packages.