All employees in Spain will have option to continue working and collect 100% of pension

The Spanish government is about to agree on the reform of partial and active retirement, no longer restricting this right only to the self-employed with employees

Lucía Palacios

Madrid

Thursday, 1 August 2024, 08:42

The right to continue working while also collecting a pension in Spain will have new rules once the government's planned reforms see the light of day. These changes to partial and active retirement are what central government hopes to agree with the trade unions and employers' organisations as they meet to decide whether to support the move. The new method of making pensions compatible with paid employment will bring improvements for the majority of the working population as they head towards retirement. One group of workers less fortunate will be the self-employed with payroll workers, as they will be unable to receive, as they do now, 100% of their pension from the first year in which they reach the usual retirement age, but only 75%.

The government seeks to extend this option of working and receiving a full pension to all workers, not just those who have a business, once five years have passed from when they reached the legal retirement age, i.e. from the age of 70.This is according to the latest proposal for a royal decree that the Ministry of Social Security has sent to the interested parties.

The cut comes once the first year of the usual retirement age has been reached. Currently, for those who want to carry on working and receive 50% of their pension, under the new law they will receive 45% and an additional 5% if they are self-employed and continue with their business activities. From the second year onwards, i.e. from the age of 66 for those with a long run of paying into the system, they would then be benefitting more and would receive 55% of their pension, an amount that would increase to 65% from the third year onwards and 80% after four years.

Active retirement system

The new active retirement system therefore establishes an increasing percentage of pension compatible with the work activity once the years of retirement are exceeded. Thus 100% of the pension would be reached after the fifth year, something that until now was reserved exclusively for the self-employed who had at least one dependent employee.

This requirement for 100% is now eliminated and they will not be required to have a full track run of contributions. In addition, they will be able to access the supplements paid for each year that retirement is postponed should they so choose, which can amount to a cash payment of up to 12,000 euros or an increase of 4% of their pension, rising to 5% in the case of the self-employed.

Concessions for partial retirement reform

The government has also had to give ground on its proposed tightening of partial retirement, softening its stance. Thus, the big cut is that the government has eliminated the current possibility of partial retirement four years before the legal retirement age (from 61 in some cases) for workers in the manufacturing industry. Such workers will be allowed to take partial retirement three years earlier provided a relief contract is in place (someone to cover the hours not worked by the partial retiree). Where the government has conceded is that it will now not require 38.5 years of contributions from the worker to be allowed this early, partial retirement, the tally will remain at the current 33 years.

Workers in other sectors will be able to take partial retirement one year earlier than at present, that is, three years earlier than the ordinary retirement age, the same as in the manufacturing industry, although they will have to have 36.6 years of contributions. This is according to the ministry's proposal, but the unions are still fighting in these last hours of negotiation to lower this also to 33 years. If the retiree has only clocked up 33 years they will be able to retire two years earlier provided, in both cases, that there is a relief contract and that there are set working conditions for the relief worker.

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