Pensions: payments set to fall from 2027 as life expectancy rises
The new conversion factors for the total contributions will result in smaller pensions than those paid out in 2025–26
Key points
In 2027–28, contributory pensions, or the contributory portion of pensions calculated using the mixed method, will be less generous than they are at present. This is a consequence of the application of the new coefficients contained in the ministerial decree issued by the Ministries of Labour and the Economy on 16 October and published on 19 October. Under the contributory calculation method, the pension amount is determined by applying coefficients to the total contributions accumulated by a worker at the time of retirement.
Coefficients and requirements
The coefficients are updated every two years on the basis of changes in life expectancy and the actual trend in the long-term rate of change in gross domestic product relative to trends in incomes subject to social security contributions. Since the contributory method of calculating pensions aims to ensure that the total amount of benefits paid throughout retirement corresponds to the accumulated balance, if remaining life expectancy increases, the coefficient becomes less favourable, because the pension will have to be paid out over a longer period.
This is the case for the 2027–28 period compared with 2025–26, a period for which a rise in the retirement age has already been decided, which is also linked to life expectancy: whilst now the retirement age is 67, next year it will be 67 years and 1 month, and the year after that 67 years and 3 months. Furthermore, for the same reason, within the same two-year period, the coefficients vary according to the retirement age, as those who retire earlier will receive their pension for a longer period.
Examples
In 2026, a total contribution base of 250,000 euros will result in a gross monthly pension (thirteen monthly payments) of 1,078 euros for a 67-year-old; the pension will commence in 2027 will be €1,060 for the same total contributions. For a 63-year-old, the amount will fall from 954 to 935 euros. Over the next two years, however, the different retirement ages will have the following effects on the amount: still assuming a total contribution of 250,000 euros, whilst a 67-year-old will receive 1,060 euros, a 64-year-old will have to make do with 963 euros, and a 71-year-old will receive 1,227 euros. These latest figures show how, under the contribution-based calculation method, the retirement age affects the amount of the pension, rewarding those who delay the end of their working life.
As a general rule, this system is used to determine:
