What is the intergenerational equity mechanism?

What is the intergenerational equity mechanism?


  • The intergenerational equity mechanism was created to guarantee the purchasing power of pensions and reinforce the financial sustainability of its public system


What is the intergenerational equity mechanism?

Maintaining the pensions of the future is a current concern. For this reason, and with the objective of guaranteeing the purchasing power of pensions and reinforcing the financial sustainability of the public pension system, the intergenerational equity mechanism or MEI was born.

It is a tax, established in the Law 21/2022, of December 28, guaranteeing the purchasing power of pensions and other measures to reinforce the financial and social sustainability of the public pension system, which seeks an improvement in the Social Security reserve fund to cover retirement pensions that will also affect the contributions paid by the self-employed.

This tax will affect those self-employed workers with or without workers, since it will affect their own self-employment quota and the amount that goes through their workers, if they have them. This translates into an increase of 0.6% in the monthly amount that must be paid to Social Security. This measure is not new, since it has been in place since January 1, 2023 and will remain active until 2032. In this period, the MEI will increase by 0.1 % annually until reaching 1.2 %, and, in this way, increase the Social Security pension fund.

During 2024

For 2024, what the self-employed should expect from this tax is an increase of 0.1 % compared to last year. This represents a progressive increase, reaching double the contribution made in 2023. In the case of a self-employed worker, this increase will be 0.7 %, which will have an impact each month on their Social Security payment quota.

In those cases in which the self-employed worker has workers under his/her care, he/she will also see an increase in what he/she pays for his/her workers to Social Security. The increase amount is also 0.7 % where the contractor must pay 0.58 % and the remaining 0.12 % must be assumed by the worker. This is applicable to the contribution base for common contingencies, in all situations of registration of the Social Security system.

In order to have a breakdown of the installments to be paid in this monthly contribution, there is the self-employed quota simulator of Social Security. This simulator will help calculate the benefits based on the amount of the intergenerational equity mechanism. In this way, with the MEI, this increase of 0.7 % will be able to guarantee the progressive increase of the fund and cover future retirement pensions.

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