Santander Spain will offer early retirement from age 55 with up to 95% of the pension

Banco Santander and employee representatives held a final meeting regarding the early retirement agreement on Friday morning. The plan will allow the bank's employees in Spain to retire at the age of 55 and retain up to 95% of their pension without penalty.

However, it does not set a target number of departures. "There is no figure," both sides have repeated since talks began at the end of last month. "It's entirely voluntary."

The voluntary nature of the scheme cuts both ways. Employees will not have to take early retirement, but the bank will also be able to reject applications where it considers it necessary to retain particular roles or skills within the business.

Around 5,000 Santander employees in Spain (roughly a quarter of the bank's workforce) will be eligible to consider the offer during the two-and-a-half-year life of the agreement. Of those, about 3,500 are already 55 years old or over, while a further 1,500, currently 53 or 54, will reach the qualifying age during that period.

That does not mean all of them will leave the bank. Trade unions acknowledge that Santander could not afford to lose so many employees and that many eligible staff will choose to remain.

The minimum qualifying age proved one of the biggest sticking points in negotiations. Unions had pushed to lower it to 50, although that was not their only demand. Their main objective, sources involved in the talks told this newspaper, was to secure better terms than those agreed under Santander's previous redundancy programme. "That only makes sense given the bank's much stronger financial position," they said.

Santander’s initial proposal offered employees aged 55 to 57 early retirement on 75% of salary, rising to 76% for those aged 58 and over.

At the second meeting, the unions tabled a counterproposal offering 76% of salary for 50- to 54-year-old employees, 84% for 55- to 57-year-olds and 86% for 58-year-olds and above.

They also proposed a long-service payment of between 19,000 and 30,000 euros for staff with more than 15 years' service, alongside measures such as a generational renewal clause and annual increases linked to inflation.

The final agreement provides 74% of gross salary for employees 55-57 years of age and 76% for over-58s. Santander will also fund voluntary national insurance contributions through Spain's Social Security system until employees reach the age of 63 years and six months, with the option of extending this to age 64 by spreading the financial allowance over a longer period.

Around 5,000 employees will be eligible for the scheme, although unions expect between 2,500 and 3,000 to take it up.

The arrangement will allow employees to continue building up pension contributions, significantly reducing the penalty applied to early retirement. Union calculations suggest that someone retiring 18 months early previously faced a reduction of up to 21%. Under the new agreement, the effective early retirement period falls to one year, cutting the reduction to around 5.5%.

For someone entitled to a monthly pension of 3,000 euros, that would increase their pension from around 2,370 to approximately 2,835 euros. The monthly reduction would therefore fall from 630 to 165 euros.

Santander has also improved the annual uprating of the Social Security contributions it will fund, increasing the cap from 3% to 4%. The agreement also guarantees continued life insurance cover, preferential rates on staff loans and mortgages, annual employer pension contributions of 1,000 euros, disability benefits and long-service awards.

Although both sides have reached an agreement, they still need to finalise and formally sign the text, which they expect to do early next week.

Santander has used this type of voluntary early retirement scheme to reduce its workforce in recent years, rather than launching another collective redundancy programme. The bank last carried out a large-scale restructuring exercise in 2020, during the Covid-19 pandemic.

That programme resulted in 3,572 employees leaving the bank and attracted more applications than originally expected. Since then, Santander has relied on a steady stream of voluntary departures and early retirements instead of another collective redundancy process.

The pace accelerated in 2025, when the bank cut its workforce by 4% (the biggest reduction in more than two decades) after trimming staff numbers by 3% in 2024. In Spain alone, around 800 employees left last year, leaving Santander with about 34,000 staff in the country and almost 198,000 worldwide.

Employee representatives believe the new agreement could increase the pace to around 1,000 departures a year. They estimate that between 2,500 and 3,000 employees could take early retirement during the scheme's two-and-a-half-year duration.

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