The Spanish government has announced plans to contribute €2.96bn from the Intergenerational Equity Mechanism to the country’s state pension reserve fund.

Announced in the nation’s Budget, the contribution will be the first transfer of money to the state pension reserve fund in 13 years.

Treasury Minister, María Jesús Montero, emphasised that this would be done “without increasing the deficit of this sub-sector”.

She noted that this was thanks to the increase in the minimum basic wage, the improved composition of employment and its stability, and the good management of the state pension reserve fund.

The reserve fund, which held around €2.2bn at the end of 2021, is used to help pay state pensions when finances are stretched.

It is partly funded by the Intergenerational Equity Mechanism, which was introduced in 2021 and consists of a 0.6 per cent surcharge on social contributions.

According to Reuters, the reserve fund had €66bn in 2011 when the financial crisis hit, and the government had to use money from the fund to pay out pensions over the following years.

In the Budget, it was also revealed that pensions would rise in line with the CPI inflation figure recorded up to November, which the minister estimated to be around 8.5 per cent.

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