The Intergenerational Equity Mechanism (IEM, MEI in Spanish) is a new contribution rate that has started to be applied this January 1, 2023 and affects both employees and companies as well as self-employed professionals. It will be applied between 2023 and 2032
The aim of this mechanism is to prevent the younger generations from assuming the entire burden of retirement, distributing contributions in a balanced way and strengthening the pension system in the long term.
The State aims to collect around 40,000 million euros in this period, which will go directly to the Social Security Reserve Fund. And once the 2032 target has been reached, it will be time to review the state of the pension system in order to make decisions.
New Intergenerational Equity Mechanism
The Intergenerational Equity Mechanism will be applied in all situations of registration or assimilated to registration in the Social Security system in which there is an obligation to contribute for the coverage of the retirement pension.
Amount of the Intergenerational Equity Mechanism
This new contribution, of a final and temporary nature, will be 0.6% and will be calculated on the contribution base for common contingencies.
The worker will assume 0.1% of the total and the company will have to assume the remaining 0.5%.
This means about 12 euros per month for a regulatory base of 2,000 euros. In this case, 10 euros would correspond to the company and 2 euros to the worker.
How does it affect the self-employed?
In the case of the self-employed, they will assume the full 0.6%.
It should be remembered that next year the new contribution system for self-employed will start to be applied according to their real net income, so many of them could see their contribution increased or reduced accordingly.
Who are excluded?
The IEM will not apply, therefore, to those groups of workers excluded from paying contributions for the retirement contingency, among others, the following cases:
- Workers obliged to contribute exclusively for TI derived from common contingencies, professional contingencies and solidarity contributions (for example, active retirees).
- Collectives obliged to contribute exclusively for professional contingencies.
- New students joining the Ministry of Defense.
- Workers who carry out training programs and non-work and academic internships.
