Uncategorized

MEM, what new tax will you pay from January 2023?


More than 20 million workers enrolled in Social Security will find a new surcharge on their payroll starting in 2023. All of them, without exception and regardless of their salary level, will be subject to the new contribution that will be applied by the so-called Mechanism of equality between generations (MEI). It would mean 0.6% of the salary and the money collected each month would go directly into what is known as the pension “piggy bank”, the name given to the Social Security Reserve Fund.

The new price, which practically works as a tax The finalist for the payment of pensions, that is, those resources will not be used for any cause other than the payment of Social Security benefits, goes into effect on January 1.

Why is the new tax calculated?

The intergenerational equality mechanism was approved at the end of 2021 as one of the points of the first part of the pension reform agreed with Brussels to receive refunds.

In principle, the measure should have been a kind of autopilot that would ensure the balance of the Social Security budget in the coming decades, when a retirement influx is expected due to the retirement of a generation baby boom Confirmation of system accounts.

This was the goal of the former Sustainability factor, which served as a kind of dividing the expected average pension over the years in which it was to be collected by the number of years of life expectancy. In other words, pensions are reduced if the life expectancy of the beneficiary increases from the age of 65. This form, canceled, will not apply. The measure included reductions of up to 20% in new benefits.

Payment amount

The new “tax” to be charged on payroll will be 0.6%: the employer will pay 0.5%, and the worker will pay the remaining 0.1%. According to the UGT and CCOO unions, A.J paid If you have a salary of €2,000 per month, an increase of 0.6% means a monthly payment of €12 per month: €2 will be paid by the worker and the remaining €10 by the employer. This amount, then, will vary depending on the salary level though the same 0.6% applies. for workers self employed This additional cost may amount, on average, to 5 € per month.

Thus, it is clear in numbers how the government decided to change the nature of this element of the public pension system, which seeks to contain the sharp increase in spending on benefits assumed by social security and that in 2023 it will already exceed 190 thousand. million. Instead of estimating reductions in the amount of benefits based on the increase in life expectancy, a Contribution collection process Works to address excess spending on the aforementioned retirements of Baby Boomers.

How long will it be paid

At this point, doubts arise as to whether these sums applied to all workers will make it possible to raise enough to cover the overspending expected in the coming decades. At first , social Security It fixed the repayment of this new contribution for a period of 10 years, between 2023 and 2032. It is then expected to collect 22,000 million euros over the entire period. The amount is clearly not enough to cover a gap in which pension institutions such as the European Commission and the Organization for Economic Co-operation and Development could reach €50,000 million between 2040 and 2050, the period of greatest financial stress for the system.

That is why the government has launched a mechanism to introduce changes to this measure, which will come into force in just two weeks. Minister Jose Luis Escrivá In this way, it would meet the demands that Brussels has shifted to the government so that the equity mechanism is more predictive and applies the automatic adjustments necessary to maintain pension spending. In short, the “men in black” on the panel who have already noted the rules of the mechanism are asking for it to be more similar to the previous sustainability factor.

So, given that the government has already given up applying cuts to benefits, Social Security is running at a similar version, at 0.6%, but instead of charging for decades, it will be charged for 30 years, to its completion in 2050. If this path is selected, the collected level of the “piggy bank” of pensions will be multiplied by three, bringing it to approx 70,000 million.

See also  The government will allocate 2000 million to reduce central heating bills

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button