The government has recently approved the implementation of a ‘solidarity fee’ starting on January 1, 2025. This fee will be a surcharge imposed on workers earning above the maximum contribution base, currently set at 54,000 euros per year. The funds collected will be used to pay public pensions. Although this measure was already part of a pension reform approved in 2021, regulatory modifications have been made to establish it.
The solidarity fee will tax the amount of salary that exceeds the maximum contribution base with rates of 5.5%, 6%, and 7% depending on different income brackets. The fee will be updated in 2025 based on the government’s approved increase in the maximum contribution base. The distribution of this fee between the company and the worker will follow the same ratio as regular Social Security contributions.
The objective of these measures is to strengthen Social Security income as expenses are expected to increase in the coming years. The pension system is facing challenges around 2030 due to the retirement of the baby boom generation. The government aims to balance the accounts by introducing measures like the solidarity fee and Intergenerational Equity Mechanism (MEI).
The solidarity fee, combined with other reforms, is projected to increase Social Security income significantly. While it may only result in a marginal increase in revenue, it is necessary for sustainable pension funding according to government officials. Currently, there is a deficit around 0.5% of GDP which requires annual transfers from
