By Andrew Atkinson
At a time when UK pensioners may be missing out on an 8.8% increase to their state pension payments, Spain is named second amongst the top 10 countries – where your pension lasts longer.
In Spain if you have worked and paid into the system you are entitled to a Spanish State pension – lasting the second-longest of any country.
An average retirement for a Spaniard lasts for 24.15 years, largely due to having the highest life expectancy in the EU, the second-highest in Europe after Switzerland, and the fourth-highest in the world.
Early retirement has never been part of the culture in Spain, with the average worker retiring age 61.7 years, instead of the State pension age of 65, with a pensioner expected to live until 85.85 to 89.15.
Over the next few years, Spain’s State pension age is set to rise gradually, to 67.
A decision taken during the global financial crisis of 2008. Full details of the national government’s planned ‘pension reform’ have not been revealed, and are not fully decided.
Incentives mooted of up to €12,000 per extra year retirement is delayed, or financially penalising early retirement, with measures that include taxing or reducing pensions, the former is thought to be too costly and the latter looked set to create public outcry, especially as workers with care duties for elderly parents or spouses may have no option but to retire before 65.
It will be at least 2022-2023 before any announced details, with major debates between the Government and representatives of all affected parties being held.
France comes top, ahead of Spain, with a State pension age below 65, along with a culture of early retirement at 63.3, but in practice at 60.8 with an average retirement in France 24.8 years, with life expectancy between 85.6-88.1.
Australia dubbed ‘the world’s most liveable city’, Melbourne, and with a climate similar to that of Spain in the southern half of the country, a popular emigrant hotspot for retirees, with a State pension age of 65 with retirement lasting 21.55 years.
Despite ongoing international pressure on Spain and other southern European nations to carry on pushing up the minimum age for retirement, a number of EU member States have an official pension age below 65.
Italy has the highest official retirement age where you can claim your State pension five years earlier. On average, an Italian will live to be between 85.6-90.
Belgium’s standard State pension age is 65. Luxembourg has a State pension age of 62, but the typical employee retires aged 60.9, with life expectancy, 23.65 years with a life span of 84.55 -85.65.
Greece, who had economic problems a decade ago with austerity measures, has a State pension age of 62, with the average Greek retirement at 60.85 years.
Retirement within the Mediterranean, Greece is one of three countries where your pension will last you upwards of 24 years, lasting between age 84.95-86.1.
UK/Spain DTA took effect in 2015. Under this agreement, pension funds are only taxable in the country where the recipient has tax residency. Spanish residents with UK pensions are now only subject to Spanish income tax, meaning there is no UK pension tax in Spain.
People who receive state pension are forecast to receive an increase upwards of £300 a year.
Since 2010, the Government has promised Britons it will increase their state pension payments, by whichever is higher – the rate of Consumer Price Index (CPI) inflation, or average earnings inflation or 2.5%.
Due to the coronavirus pandemic and the furlough scheme, average earnings across the UK were artificially inflated, which would have seen state pensions increase by around 8%.
The Government would have paid out £3billion over the course of a year to pensioners, if it continuted with the triple lock.
Chancellor Sunak is going to break the triple lock pledge temporarily and opt for a ‘double lock’ to avoid the huge pay out.
The next state pension increase will be determined by either CPI inflation rate or 2.5%.
When announcing the triple lock scrap in the House of Commons, Thérèse Coffey, the Secretary of State for Work and Pensions, said: “This year as restrictions have lifted and we experienced an irregular statistical spike in earnings over the operating review period, I’m clear that another one-year adjustment is needed.
“It will ensure the basic and new state pensions increase by 2.5% or in line with inflation, which is expected to be the highest figure this year.
“And as happened last year, it will again set aside the earnings element for 2022/23, before being restored for the remainder of this parliament.
“This will ensure pensioners’ spending power is preserved and protected from higher costs of living, but we’ll also ensure that as we are having to make difficult decisions elsewhere across public spending, including freezing public sector pay, pensioners are not unfairly benefiting from a statistical anomaly.”
According to experts, the rate is forecast to increase by 3.3% as of next year, resulting in a weekly payment, from £179.60 to £185.55, for any Briton who has retired since April 2016, representing one of the largest increases to state pension payments on record.
The breaking of the triple lock was almost inevitable, once it was made clear that National Insurance contributions are to increase by 1.25% for both employees and employers.
A healthy adult of pension age can see people live into his or her 90s or break the century barrier, especially in Spain and other Mediterranean countries where the percentage of residents aged over 100 is significant.