The effective retirement age in Spain, somewhat below the , which in 2022 is 65 or 66 years and two months. This means that workers who have options to do so opt for early retirement if it leaves them with a pension of a sufficient amount for the rest of their lives.
Not all workers can retire early at those 64 years of age at which the effective retirement age in Spain is located (and which the Government intends to align with the ordinary age through the ‘Escrivá reform’ of pensions) . To take advantage of it, they must meet specific requirements that depend on the type of early retirement.
On the one hand, workers who opt for voluntary early retirement, one that is carried out at the will of the worker and that allows advances of a maximum of two years with respect to retirement age. Workers who have at least 35 years of previous contribution (), of which two must be within the last 15 years, may retire early at the age of 64.
In addition, they must be registered with Social Security and have the right to a pension higher than the minimum pension that corresponds to them (of the contributory pensions for 2022).
Another option is to opt for involuntary early retirement, the one that takes place when the worker sees their employment relationship end in a non-voluntary way and that allows advances of up to four years with respect to the ordinary retirement age. In this modality, 33 years of previous contribution are required (one of the ‘mili’ or substitute social benefit can be added to the global calculation), of which two must also be given within the 15 years prior to the request for retirement.
In parallel, the worker is required to register as a job seeker six months before () and that the end of the employment relationship be caused by any of the following causes:
-Collective dismissal for organizational, technical, economic or production reasons.
-Dismissal for objective reasons.
-Dismissal for reasons of force majeure verified by the competent authority.
-Extinctions of contract due to judicial resolutions in bankruptcy law processes.
-Extinction of contract due to death, incapacity or retirement of the individual entrepreneur.
-Unilateral termination of the contract by the worker in substantial modifications of working conditions and transfers.
-Extinction of contract for reasons of gender violence.
How the amount of the retirement pension is calculated
The amount of the pension for workers who retire early at the age of 64 is obtained through two processes. The first is to apply the , which takes the contribution bases of the 25 years prior to retirement (300 months) and divides them by 350 to obtain the amount of the regulatory base.
Different percentages are applied to this regulatory base based on the total number of years of contributions by the worker: if with the minimum of 15 years one is entitled to 50% of the regulatory base, for each of the following 106 months a 0.21% extra and for each of the following 146 months an extra 0.19% is granted. With 36 years of work, you are entitled to 100% of the regulatory base.
What are the cuts in the amount of the pension
The second process is the reduction in the amount of pensions through the application of reducing coefficients as compensation for the advancement of retirement. These coefficients, since they have become monthly (before they were quarterly) and applicable to the amount of the pension (before it was on the regulatory basis).
The new coefficients were published in the and depend both on early retirement and on the years previously worked by the worker. In the case of people who retire early at age 64, they are the following if they opt for voluntary early retirement:
-For workers under 38 years of age and six months of contributions: the reductions are between 21% and 3.26%.
-For workers between 38 years and six months and 41 years and six months: the reductions are between 19% and 3.11%.
-For workers between 41 years and six months and 44 years and six months: the reductions are between 17% and 2.96%.
-For workers with more than 44 years and six months of contributions: the reductions are between 13% and 2.81%.
In the event that workers take advantage of involuntary early retirement, they will have other reduction coefficients. However, they have the option of choosing whether the reduction coefficients for voluntary early retirement in the two years prior to the ordinary retirement age would be more favorable to them. In any case, the coefficients of involuntary early retirement are as follows:
-For workers with less than 38 years and six months of contributions: the cuts range from 15% to 0.63%.
-For workers between 38 years and six months and 41 years and six months of contributions: the cuts range from 14% to 0.58%.
-For workers between 41 years and six months and 44 years and six months of contributions: the cuts range from 13% to 0.54%.
-For workers over 44 years of age and six months of contributions: the cuts range from 12% to 0.50%.
These coefficients collected above are applied to the amount of the pension, that is, to that amount of the regulatory base to which the worker is entitled. Thus, depending on the advance and the time that has been previously quoted, it will be more or less profitable for the worker to anticipate retirement. Everything will depend on the cut that he is willing to accept in what, this time, would be his definitive retirement pension.
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