At a time when the real purchasing power of retirees continues to decline, the government keeps granting annual gross increases that do not exceed the level of inflation. The new increases planned for 2027 (2.8% gross) are below official inflation, which stood at 3.8% in August of this year.

Specifically, the 2.8% gross increase coming in 2027 will raise pensions by 14 to 42 euros gross per month, while high prices continue to eat into retirees’ income. For those receiving a 500-euro pension, the increase is limited to just 14 euros per month, while even a 1,500-euro pension will rise by only 42 euros, and that is before taxes and deductions.

Under the government’s plan, starting January 1, 2027, the adjustment of main pensions will not exceed 2.8%. This also applies to about 670,000 retirees who receive a “personal difference.”

It should be noted that the government continues to factor in only half of the Consumer Price Index and half of GDP growth. As a result, retirees keep losing disposable income. Even these small increases lead to a heavier tax burden, because the tax brackets are not adjusted for inflation.

Until 2022, no increases were granted because of the bailout agreements.

From 2023 to 2026, pensions rose by a cumulative 16.4%, but only main pensions, while official inflation reached 19.8%. In other words, retirees lost disposable income. In addition, main pensions suffered cumulative cuts that reached 20% to 45% in many categories between 2010 and 2018.

Overall, retirees are estimated to have lost up to 45% of their income over the last 17 years. As a result, their purchasing power remains under constant pressure, as rising prices and persistent inflation have fully absorbed any financial gains.

In a related analysis, the Foundation for Economic and Industrial Research (IOBE) draws a key distinction between “nominal” and “real” value. While retirees did see nominal increases in their bank accounts, the inflation-adjusted value of that money, meaning their actual purchasing power, showed no meaningful improvement. Inflation acted as an “invisible hand” that canceled out the state’s corrective measures and kept retirees’ standard of living stagnant.

How the increases are calculated

The main reason increases do not exceed inflation is that the current calculation mechanism includes limits that do not allow inflation losses to be fully covered.

Pension increases, which were frozen until 2022 due to bailout restrictions, are now linked to inflation and the rate of economic growth. However, the current legal framework states that the final adjustment cannot exceed the inflation rate.

This means that, in real terms, a large share of retirees continue to see their disposable income squeezed by rising prices for food, energy and basic services.

For this reason, retiree associations are calling for a change in how increases are calculated, so that adjustments truly cover inflation losses and restore part of the purchasing power lost in previous years.

Finally, the increase of 2.8% gross will be paid in December 2026 to 2.5 million retirees, with the January 2027 pension. Supplementary pensions will not be increased.