Background and Objectives of the Reform
In accordance with Royal Decree-Law 2/2023 previously passed by the Spanish government, two new deductions will officially appear on payslips starting January 2026 to ensure the long-term sustainability of the pension system. This reform, driven by the Ministry of Inclusion, Social Security and Migration, will increase social security revenue by expanding the Intergenerational Equity Mechanism (MEI) and establishing a ‘solidarity contribution’, directly impacting the contribution structure for companies, employees, and the self-employed.
Increase in the Intergenerational Equity Mechanism (MEI) Rate
The rate for the Intergenerational Equity Mechanism (MEI) will increase from 0.8% in 2025 to 0.9% in 2026. For salaried employees, this 0.9% rate is split, with the employer covering 0.75% and the employee 0.15%. The self-employed, however, must bear the entire 0.9% increase themselves. For an employee earning the minimum wage, for example, their monthly MEI deduction will rise slightly from approximately €1.80 to €2.10.
New ‘Solidarity Contribution’
Aimed at high earners, a new ‘solidarity contribution’ will be implemented. It applies to the portion of a monthly salary that exceeds the maximum contribution base (€5,100 in 2026) and currently does not affect the self-employed. The rates for 2026 are set as follows:
- For the portion of monthly income from €5,100 up to €5,611, the rate is 1.15% (0.96% paid by the employer, 0.19% by the employee).
- For the portion of monthly income from €5,611 up to €7,653, the rate is 1.25% (1.04% paid by the employer, 0.21% by the employee).
It is noteworthy that these rates will increase annually, and are projected to reach 5.5%, 6%, and 7% respectively by 2045.
Overall Impact Assessment
Although for most employees the monthly change in salary will only be a few euros, the cumulative effect of this reform represents a steady increase in extra expenses for both individuals and businesses. The explicit goal of the reform is to strengthen pension reserves. The MEI alone is projected to bring an additional €5.3 billion in revenue to the social security system in 2026, laying a financial foundation to tackle future demographic aging challenges.
