Changes to Spain’s Social Security system, coming into effect from 1 January 2026, are drawing significant attention among the country’s workforce. According to the latest official forecasts, part of a broader pension reform, contributions are set to rise substantially, directly affecting millions of employees’ pay packets and increasing businesses’ labour costs. The reforms aim primarily to strengthen the Reserve Fund in response to the demographic challenge of an ageing population, ensuring the long-term viability of future pensions.
The reform centres on three key measures: a gradual increase in the Intergenerational Equity Mechanism (IEM), the introduction and escalation of a solidarity contribution for higher earners, and the revaluation of the maximum contribution base. Together, these measures seek higher contributions from those with larger incomes, addressing the growing financial demands of a population that is living longer and having fewer children. It represents a long-term strategy to secure Spain’s pension system.
The Intergenerational Equity Mechanism (IEM)
The IEM, effectively an additional payroll surcharge, is the cornerstone of the reforms. Currently set at 0.80% in 2025, it is projected to rise to 0.90% in 2026. For salaried employees, 0.75% of this will be covered by the employer, with the remaining 0.15% paid by the employee. Self-employed workers will bear the full 0.90% themselves. Meanwhile, the solidarity contribution, which applies to salaries above the maximum contribution base, will also increase, as will the maximum base itself, raising costs for higher earners.
A Long-Term Pillar for Pensions
The IEM was introduced to replace the former Sustainability Factor, explicitly designed to safeguard the long-term viability of Spain’s pensions. It adjusts system income and expenditure in line with demographic trends, particularly the ageing population and the retirement of the ‘baby boom’ generation. Applied gradually, the surcharge follows a pre-determined schedule.
Since its introduction in 2023 at 0.6%, the IEM has risen steadily: 0.7% in 2024, 0.8% in 2025, and projected to reach 0.90% in 2026. Incremental increases will continue until it stabilises at 1.2% in 2032. The allocation remains the same: for salaried employees, most of the surcharge—0.75% in 2026—will be paid by employers, with 0.15% by employees. Self-employed workers pay the full 0.90%. This approach ensures a fair distribution of responsibility across employers, employees, and self-employed workers.
The Solidarity Contribution
The solidarity contribution is an additional Social Security payment aimed at salaried employees whose earnings exceed the maximum contribution base. Its principle is simple: higher earners contribute more, promoting fairness and system sustainability. Introduced at the start of 2025, rates vary depending on how much the salary exceeds the maximum base, which for 2025 is set at €5,101.20 per month (€61,214.40 per year).
- Earnings up to 10% above the maximum base: 1.15% contribution
- Earnings between 10% and 50% above: 1.25%
- Earnings more than 50% above: 1.46%
Notably, the solidarity contribution does not apply to those under the Special Scheme for Self-Employed Workers (RETA), highlighting a key difference from the IEM.