New Pension Reform: Government Implements Solidarity Fee on High-Income Workers Starting in 2025

In a significant move to secure the future of the pension system, the Government has announced the implementation of a ‘solidarity fee’ starting on January 1, 2025. This fee will be a surcharge imposed on workers earning above the maximum contribution base, currently set at 54,000 euros per year.

The solidarity fee will tax the amount of salary that exceeds the maximum contribution base with rates of 5.5%, 6%, and 7% depending on different income brackets. The funds collected will be used to pay public pensions. Although the implementation was already planned as part of a pension reform approved in 2021, the Government recently approved regulatory modifications to establish this fee.

The objective of these measures is to strengthen Social Security income as expenses are expected to increase in the coming years. The pension system is facing challenges around 2030 due to the retirement of the baby boom generation. The Government aims to balance the accounts by introducing measures like the solidarity fee and the Intergenerational Equity Mechanism (MEI).

Critics have raised concerns about the impact of the solidarity fee on high-income workers, warning of potential migration of talent. However, the Government sees