Access to retirement is increasingly later. The latest reforms of the pension system have been strived to increase the average retirement age of Spaniards through several levers: the legal age and penalties. The obstacles to voluntary early retirement increase progressively throughout the age of access. On the other hand, the penalties are especially harmful in the case of contribution careers that do not reach 38 and a half years. In this case, workers will only be able to access early retirement 24 monthly payments before their expected legal age, that is, at 64 years and eight months (two months more than in 2024). Furthermore, this type of retirement carries with it a series of penalties that even reach 21%.
For careers that exceed 38 and a half years of contributions, Social Security establishes the access age at 63 years. The regulations generally require Those interested in advancing their retirement must prove at least 35 years of contributions.
The so-called reduction coefficients of the public pension are, in themselves, a cut on the Social Security benefit to discourage voluntary departures from the labor market “in order to “promote retirement at ages closer to the legal retirement age and encourage longer contribution careers.”argued the bill that regulates these penalties.
For this reason, they act through financial penalties, but also by requiring each person to be of legal age and longer contribution periods. This punishment is complemented by other measures, such as rewards for delayed retirement, and were toughened in the last pension reform.
The cut in the future pension varies between a maximum of 21% in the event of advancing the retirement age by 24 months (two years) and having less than 38 years and 6 months of contributions; and a minimum of 2.81% if you advance retirement by one month and prove more than 44 and a half years of Social Security contributions.
In the case of forced exits, those that link the unemployment stage with the collection of the pension, these cuts were softened or maintained after the reform.
Age is a key factor. Voluntary access to the early modality is only allowed to meet several requirements. The interested party must do so two years before the legal retirement age (66 years and eight months) or the ordinary retirement age if they meet the requirements (65 years), therefore, from the age of 64 years and eight months or at the age of 63 with general character. Likewise, to be able to access early retirement, all workers must accumulate a minimum of 35 years of Social Security contributions.
As the legal age advances progressively until 2027, access to retirement advances is also becoming increasingly later and more demanding.
In the maximum pensions
There is a special case for premature departures of those who have a theoretical pension greater than the maximum benefit before applying the reducing coefficients. On these people a transitional regulations which is tightening the cuts for ten years and which began to be applied on January 1, 2024. Thus, it will gradually eliminate the previous regulations that applied the reducing coefficients on a regulatory basis.
This year it had a maximum penalty of more than 5%. Now it will exceed 7% in the case of the most common contribution careers (less than 38 and a half years old or 41 and a half years old with contributions). The cuts will only be applied to the extent that the evolution of the maximum pension completely absorbs the effect of the increase in coefficients compared to 2021, so that the pension is never lower than what would have corresponded under the previous legislation. This was estimated by Social Security in a circular that it published this year to clarify the regulations before their application.
How are early retirements going?
The truth is that the progressive increase in the retirement age, together with the greater cuts that workers face if they leave earlier than estimated by their own will, is having its results on the entire system.
The Early retirement has dropped to 29.1% of total discharges todaywhen last decade it even exceeded 40%. The reducing coefficients take effect on 19.7% of discharges, mainly voluntary, and before the reform they were more than 30%.
The biggest cuts are barely having an effect on the group of self-employed workers: they did not retire prematurely before, nor do they do so now. It has been in private sector employees where the effect of the last reform has been most noticeable. In the past decade, one in every two departures was early. Now, it has plummeted to 31.5% of all discharges.
Particularly striking is the decrease in forced retirement, which is taken by people who link the stage of unemployment with the collection of the public pension involuntarily. After the financial crisis, one in five retirement registrations were involuntary early, when they now barely represent 3.5% so far in 2024.
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