Even if we know little about pension calculations, we can deduce that the worst time to have a contribution gap or see our salary cut is at the end of our professional career. What happens if I get laid off or my business closes shortly before I reach retirement age? Do I have to resign myself to the fact that a change in my working conditions will reduce my future pension almost at the discount time? In these cases, it is possible to sign a special agreement with Social Security and agree on the monthly payment of our own contribution.
This type of agreement is designed to facilitate obtaining a retirement pension or to improve it. So, in the first instance, it can help us meet the requirements to achieve it – fifteen years of contributions with the obligation that two of them be immediately prior to retirement – and, incidentally, also generate our spouse's right to someday have a widow's pension.
These minimums allow us to collect 50% of our regulatory base in retirement, a percentage that increases as we add contributions: if we go from 15 years to 20, the pension would be 65%; If there were 25, we would reach 80%; and if, finally, we reached 35 years of age we would receive 100%. Taking into account, furthermore, that the regulatory base is determined by dividing by 350 the sum of the contribution bases for the 25 years prior to retirement, the agreement serves to improve the benefit by preventing a stoppage or worsening of our remuneration from having an impact on the final calculation allowing us to continue increasing both the value of the regulatory base and the percentage of it that we will collect.
'Buy' the pension
«It must always be understood as something extraordinary. Our public benefits system does not allow us to contribute without a real activity behind it and, as with these agreements it could be interpreted that we are 'buying' the pension, which would be contrary to the system, it is only allowed in very specific situations,” explains Jorge Campmany. , labor lawyer and founding partner of Campmany Abogados. Thus, as Social Security itself recognizes, among its most common subscribers there are workers hired with salaries lower than those they earned in the last year, people whose unemployment benefit or subsidy runs out, and pensioners with partial disability who are They have been denied a pension, but there may also be, for example, multiple employees who have ceased some activity or people who have withdrawn from Social Security after requesting a pension that was later not recognized.
Furthermore, apart from the special general regulation agreement, there are variants designed to specifically accommodate, for example, those who reduce their working hours to care for a family member, non-professional caregivers of dependent people, recipients of unemployment benefits for those over 52 years of age, affected by strikes, lockouts or EREs, elite athletes, aid workers, disabled people with special difficulty finding work…
In addition, you must comply with certain prerequisites for contributions, which in the general special agreement are 1,080 days within the twelve years prior to being deregistered from Social Security, which is also mandatory. You also have to respect the times; «We must submit the request within one year and, if within that year, we do so in the first three months, the agreement will be considered valid from the day following the withdrawal. If we process it later, we will quote from the day we present the application,” says Campmany. By the way, the Administration must respond to our request within three months. If it does not do so, it is considered approved.
Does it pay off?
To determine how much we pay each month, Social Security allows us to choose a contribution base located between the current minimum and maximum. This year, therefore, it would be between 1,323 and 4,720.50 euros. Now it's time to get out the calculator, because to know the quota you must first calculate 28.3% of the chosen base and then multiply the result by 0.94. That leaves us between 352 and 1,255 euros per month, which will give us the opportunity to revalue each year with the CPI and are always deductible in the Income Tax Return.
It is important to clarify that our pension will not increase by that same amount. So you have to get advice to know how much we are going to improve our monthly benefit thanks to the agreement payments and then calculate how many months of pension collection it would take to amortize the money that we would allocate to it. «It is true that life expectancy is increasingly higher, but if once retired it takes twenty years to recover what was paid, it may not be worth it. If we need it to reach fifteen years of contributions because the other option is not to have a pension, it may be worth paying for longer, but if what we want is to compensate for bad years and improve the pension, I would limit it to very short periods, of about two years,” says Campmany.
#contribute #legally #working
