Reform designed by Minister José Luis Escrivá to support the country’s future sustainability pensions It takes the track and leaves its first traces on the labor market. owner Social Security During the lengthy negotiation process with the social actors and parties in Congress, he argued that there was no need to extend the legal retirement age – as he is doing now. France-, but the key had to be given incentives and the Spaniards who can see that working for many more years is profitable. That way they will contribute longer, and in return, Social Security will have to pay them a pension for fewer years.
In short, betting on carrots instead of sticks as previous governments did. One of these carrots is the possibility of choosing the only payment – a kind of check – to collect the employees who decide to extend their working life by at least 12 months.
For those who have decided to take advantage of this option so far, the average amount of the check in question €20,511, according to Social Security data. However, there are significant fluctuations in the resulting amount, depending on the corresponding initial pension, the years contributed and the number of years in which it was decided to postpone the moment of retirement.
According to these three variables, the minimum amount of the retirement age delay check is approximately 5,000 euros for each year of delay; According to the assumptions made in Social Security publications, the maximum amount is approximately 12,500 Euros per year. The average amount concluded in the first five months of 2023 was 20,511 euros.
New incentive plan
New incentives for delayed retirement are included in the law. first block of pension system reform Agreed by the government with employers and unions and formalized in the Moncloa gardens in the summer of 2021.
There the Government approved a series of incentives to delay workers’ retirement. And the result is that two years later, the number of employed people who decided to postpone their retirement for the first five months of 2023 increased by 100 percent. Four five% Compared to the same period in 2022, according to the latest data provided by Social Security. Compared to the first five months of 2019, the increase reaches 62%.
Criticism by some of those who opposed these measures at the time was that they were complements that benefited the already higher-paid strata of the labor market. widen the gap Well, those who work physically – such as a worker or a cleaner – will hardly consider extending their working life due to their health conditions. Generally better-paying self-employed professionals – senior lawyers, university professors or surgeons, among others – have more opportunities to access these checks or increased pensions.
For more delay and a longer time
In Spain, between January and May of this year – the latest data available – total 137,049 people. Of this total, 11,075 were delayed retirement cases (8.1%).
A year ago, when the reform was still underway and retirement figure almost the same, the number of workers who postponed their retirement was 7,649 (5.5%). The increase was then 45 percent in one year.
Of the 11,075 retirements delayed until May, a total of 5,383 did so. at least 12 months (that’s the time the option to claim overdue supplement is available), and that’s three times the number of people who postponed their retirement for more than a year in 2022.
In other words, there are more workers (45% more) postponing the retirement age, and more are doing so for retirement age. a longer time (triple).
The legal retirement age is currently 66 and a half yearseven though it’s real age 64.8 years. It is aimed to bring the second figure closer to the first figure with different incentives. This is largely dependent on Social Security’s ability to generate more income and ease tensions from his retirement. baby boomer generation.
three formulas
Minister Escrivá’s reform offers the opportunity to choose between: three incentive formulas In exchange for an extension of the retirement age.
The first allows for a lump sum (check) depending on the corresponding initial pension, the number of years contributed and the period for which the pension was postponed.
The second option allows you to charge 4% more retirement for each year in which retirement is delayed (pre-reform this rate was 2%). In principle, this formula might offer retirees a longer-term advantage, but it deprives them of that immediate injection of liquidity that the check represents.
The third form of incentive to extend the retirement age consists of: hash formula: cash a check and increase your future pension a little more.
According to the latest data of SSI, one in three employees Those who delay their retirement by at least 12 months choose to cash the check (the first of the formulas).
Penalties if you advance your retirement
Incentives to delay retirement’carrot’but Escrivá’s system also ‘bat‘. And the reform brings a series of innovations. reducing coefficients punishing workers who make decisions more voluntarily advancing your retirement, cuts the future pension. These penalties focus especially on the first months of retirement and, according to the data handled by SSI, they take effect before they come into effect.
And the thing is, early retirement penalties will begin to apply, even though rewards that will flatter work life are in place. Those who retire early in 2024.
In 2021, the year the reform was announced, 63.6% The proportion of retirees retired under the age of majority, fearing the penalties that would come with the new system.
A year later, with the standard already known but not yet in force, that percentage was reduced. at 43.9%, There is a particularly intense decline among people who choose to estimate their retirement at two years (the maximum time allowed by law).
Along these lines, the Escrivá reform was also the result of a collective agreement. forcing someone to retire. If the worker in question does not have the minimum contribution period required to retire, this status will be denied. It is also closely linked to the obligation to replace the worker with an indefinite benefit contract and the promotion of women in more masculine sectors.