High Ex Post Actuarial Returns, Modest Benefits? Disability Grade, Sex and Age at Award in Spanish Permanent-Disability Pensions, 2015–2023

This paper examines the distributional structure of permanent-disability pensions through an integrated actuarial decomposition of award records. Using microdata from the Continuous Sample of Working Lives (Muestra Continua de Vidas Laborales, MCVL), we analyse 26,719 contributory permanent-disability pension records in Spain over 2015–2023. Observed defined-benefit (DB) pensions are actuarially valued and compared with estimated notional defined-contribution (NDC) capital using capital gaps, money’s-worth ratios (MWRs), and real internal rates of return (IRRs). Results are reported by benefit category and sex, with additional analyses by age at award and contribution duration. The findings reveal a persistent income–return–cost asymmetry: in the main categories, women receive lower monthly pensions and reach disability with lower estimated capital, yet display higher MWRs and IRRs and more negative individual capital gaps. Both MWRs and IRRs generally decline with age at award and contribution duration. This pattern does not indicate excessive benefit generosity; it reflects the insurance nature of permanent-disability pensions, because early disability, weak contribution histories, and long expected payment durations can produce costly lifetime promises despite modest monthly benefits. Minimum-pension supplements reduce lower-tail dispersion, while survivor-coverage and mortality assumptions change magnitudes without altering the basic interpretation. Assessment therefore requires a joint reading of income, contribution-relative returns, and capital gaps, while distinguishing award-level gaps from aggregate financial balance.