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New research published in the International Journal of Sociology and Social Policy by University of Valencia professors of Applied Economics José Manuel Pavía and Josep Lledó challenges one of the pillars of the public debate on pensions in Spain: their progressivity. The study, entitled On the progressivity of public pension systems: the case of Spain, concludes that the current system indirectly favours higher-income groups due to disparities in life expectancy.
Traditionally, the Spanish system has been regarded as progressive because lower pensions have proportionally higher replacement rates. However, this analysis reveals that this perception is incomplete. By examining a massive set of microdata (48.5 million records broken down by census sections), the researchers demonstrate a direct correlation between income level and longevity.
“The Spanish pension system is indeed generous, in the sense that you receive more than you contribute – where the contribution is the sum paid by both the employee and the employer – but it is not progressive”. According to Pavía, stating categorically that the system is progressive means “assuming that life expectancy at retirement age is the same for everyone, regardless of income”.
The study points out that this assumption is fundamentally flawed, since in practice people with higher incomes tend to live longer after retirement, allowing them to receive their pension for a longer period. Longevity thus emerges as the key factor behind the imbalance and the source of regressivity in the pension system.
When calculating actual rates of return (the ratio between total contributions and total benefits received over a lifetime, adjusted for purchasing power), the data show that high-income taxpayers end up receiving a higher relative return than low-income contributors.
Implications for public policy
In José Manuel Pavía’s opinion, this finding “provides theoretical and empirical support for the latest reform of the pension system, specifically the so-called ‘solidarity contribution’, which began to be implemented at the beginning of 2025 and means that higher incomes will contribute more, in line with their earnings, as contribution bases will be increased, even though these additional contributions do not entitle them to higher pensions”.
It therefore seems inappropriate to assume that the Spanish pension system is progressive without taking sociodemographic inequalities into account. The Valencian study suggests that, for the system to be truly equitable, public policies must consider disparities in remaining life expectancy. Otherwise, the contributory system could be operating paradoxically, that is, functioning as a mechanism that grants greater benefits to those who need them relatively less.
About the research and its methodology
The researchers employ an innovative methodology based on high-resolution data on the Spanish population, enabling precise analysis by income level and geographical location. Non-contributory pensions are excluded, which is justified by Pavía on the grounds that “these pensions are the result of a social agreement – since they seek to guarantee a minimum income for people in vulnerable situations – and not a right acquired through contributions”.
The data used in the study correspond to 2019, in order, according to Pavía and Lledó, to avoid the “Covid effect”. Nevertheless, the work offers a new perspective on how biological and socioeconomic inequalities are reflected within pay-as-you-go social security systems.
Article reference: Pavía, J.M. and Lledó, J. (2025) “On the progressivity of public pension systems: the case of Spain”, International Journal of Sociology and Social Policy, 45(13-14): 183–196. https://doi.org/10.1108/IJSSP-02-2025-0141
