Guide to collecting your pension and keeping a paid job


I.Martin

Since 2013, Social Security has offered three formulas that allow you to receive the benefit at the same time as a salary

Although the effective retirement age is still below 65, in Spain 298,300 working people have already reached it. In total, they represent 1.5% of the active population. This is a record case in which several causes converge. On the one hand, the gradual decline in the legal retirement age and the equally gradual increase in the number of years of contributions required to reach 100% of the pension.

On the other hand, going from employee to retiree means losing an average of 20% of income, which forces many to prolong their working lives to add additional years of contributions and thus improve their economic situation once they retire. And finally, although the Social Security claims not to have data to assess its effect, there are different formulas that make it possible to reconcile receipt of the retirement allowance – in some cases full-time – and salaried work.

With 50% of the pension

1. Active retirement

The first option is offered by the so-called active pension, accessible to workers of any social security scheme (with the exception of civil servants), whether they work full-time or part-time.

Although it is valid for both employees and the self-employed, their economic conditions are different. While working, the former will receive 50% of the initially recognized pension regardless of the length of the working day they perform. The self-employed, except when they are legal persons or part of a common good, can charge 50% or increase to 100% if they employ at least one worker. At first, any contract was allowed, including domestic workers, but since 2018, it is necessary for this person to carry out the same activity as the self-employed. Under no circumstances may employees or self-employed persons, during the period in which they combine salary and pension, not receive either the minimum supplements or that corresponding to the postponement of the retirement age.

In Spain, there are 298,300 employed people over the age of 65, a figure that represents 1.45% of the working population. Among them, 59,700 are over 70 years old

To be able to benefit from this formula, you must be entitled to 100% of the regulatory base (of the pension), which in most cases is equivalent, for those retiring in 2022, to having contributed for 36 years. But be careful, you can only claim to reach the ordinary retirement age; In January, the conditions of access changed and it is now essential to continue working and contributing for at least 12 full months from this date.

Pursue a professional activity

Another novelty introduced this year releases the company from the obligation to maintain its level of employment during the period during which the worker covered by active retirement remains in his post. Your only obligation now is to pay for it. Both the employee and the company (or the self-employed) will pay for temporary incapacity and professional risks, contributions to which is added a “solidarity” contribution, which cannot be calculated for the purposes of benefits and amounts at 9% on the basis of the joint pension contribution. The company pays 7% and the worker the remaining 2%.

shorten the day

2. Partial retirement

The second option is partial retirement, which both shortens and lengthens working life. In other words, one of the possibilities offered – the best known – is to advance retirement without penalties thanks to a succession contract and, the other, to agree with the company to continue in the position once the retirement age reached.

When there is a relief contract, the age at which you can access partial retirement varies according to your contributory career, which must always exceed 33 years. In 2022, you can apply from 63 years and four months or from 62 years and two months if you have 35 and a half years of contributions. On an exceptional basis, until January, workers in manufacturing industries can access it when they reach the age of 61.

The self-employed can receive the total pension recognized for them if they hire a person registered under the same section of the Tax on Economic Activities (IAE)

On the other hand, it is necessary to have a full-time contract and seniority in the company of at least six years. The reduction in the working day in this case will be between 25% and 50% (67% in the manufacturing industry) compared to a full-time worker in the same company. It can reach 75%, or even 85%, if the reliever’s contract is full-time and indefinite.

The amount of the pension received during this period will be inversely proportional to the hours worked. In other words, working 25% of the day is equivalent to receiving 75% of the pension and reaching half the day is equivalent to giving up 50% of the benefit. During the term of the contract, the contribution base will be equivalent to 95% of what would have corresponded if the contract had continued to work full time.

64.8 years is the current average age of access to retirement, compared to 66 years and two months that, according to the law, those with less than 37 and a half years of contributions must have

In the manufacturing industry, if retirement is agreed before the end of the year, the semi-retired person’s contribution base will be reduced proportionally according to the reduction in hours worked.

If, on the other hand, partial retirement is used to delay retirement – ​​i.e. without a replacement contract – you must be of legal age and have a minimum contribution period of 15 years, two of which must have elapsed. during the low 15. These employees have the option of working full-time or part-time. In the latter case, they can reduce their hours by 25 to 50%.

As in the case of a relief contract, the amount of the pension received during this period will be inversely proportional to the hours worked. As long as this situation persists, the company and the worker will contribute up to 95% of the base which would have corresponded to a full-time job. Once the working life is over, Social Security will recalculate the contributions generated during this additional period in order, in the event that this right has been generated, to increase the amount of the retirement pension that already corresponded to it.

back to the pit

3. Flexible retirement

The third option is the so-called flexible retirement, which occurs when the retiree is already a full retiree and decides to return to work, either in the company where he worked before, or in another. In this case, the new contract must be part-time and salaried, even if he was previously self-employed.

The working day must be between 50% and 75% of the usual day in the company and this same percentage will be subtracted from the pension for the duration of the contract. Thus, if you work half a day, half will also be deducted from the ordinary amount of the pension (what you received before returning to work).

During this period, you will be quoted in the same way as any other worker. Also in this case, when you return to retired status, the contributions generated during this additional time will be recalculated to increase the amount of the pension before reincorporation.

During the activity, in partial or flexible retirement, the pension is reduced according to the working day. Working 25% of the hours means receiving 75% of the benefit

Continue to work without applying for the pension

With few exceptions, such as university professors, magistrates, judges, prosecutors and lawyers in the administration of justice, anyone who qualifies for retirement and wishes to delay their access to the pension can continue to work under the same conditions in which he already works. This is the so-called deferred voluntary retirement, an option which for each additional year worked offers its beneficiaries a bonus equivalent to 4% of the pension which would have corresponded to them if they had retired as soon as they had reached legal age. Today, with an average retirement pension of 1,255 euros per month, this amounts to adding 50.2 euros to each of the 14 payments for each year of continued activity.

There is also the possibility of obtaining more immediate remuneration and opting for the subscription in a single payment at the time of retirement between 5,000 and 12,000 euros (depending on the additional years of contribution) or to choose a combination of two installments.

Sporadic occupations and intellectual property rights

Apart from the formulas which combine the retirement pension with a salaried activity, you can also be fully retired – thus receiving all of its benefits – and receive income from the exercise of a professional activity.

The conditions are that he is independent, that the income for the year does not exceed the Interprofessional Minimum Wage in annual calculation – this year set at 14,000 euros – and that they are taxed on them.

Since 2019, those who, after the date of recognition of the retirement pension, carry out any artistic creation activity for which they receive income from intellectual property rights, are outside this ceiling of the SMI. In any case, retirees who opt for this formula are not required to contribute, but they do not generate new rights to the benefits they already receive.

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