Finally there is an agreement to reform pensions, after months of meetings between the Government, the trade unions UGT and CCOO and the business organizations CEOE and Cepyme. Specifically, they have reached an agreement to reform the current pension law. The text signed on July 1, 2021, is a framework in the form of a preliminary draft bill that will have to be processed in Congress so that it can be published before January 1, 2022. Date agreed for entry into force.
This agreement complements the last agreement of the Toledo Pact.
Agreement to reform pensions
The following is a list of the main measures adopted
- The reform in force since 2013 will be repealed and, therefore, pensions will not be revalued through the sustainability factor but according to the CPI. With this measure, purchasing power will be guaranteed. A guarantee will be added so that the amount of the pension does not fall in the event of years with negative inflation.
- The income of the system will be increased to guarantee sustainable pensions. To this end, the State will make annual transfers, through the General State Budget, of around 2% of GDP.
- Contribution based on real income of the Self-Employed. The aim is to establish a contribution mechanism based on the volume of income. It is expected to be implemented in 2023 and the implementation will be progressive over the nine years following the start. In this way, the contribution of the self-employed will be equal to that of employees.
- New rights will be recognized for women, unmarried couples, discontinuous permanent employees, dependency caregivers and scholarship holders.Contribution to the Social Security system for all scholarship holders, regardless of whether the training practice is paid or unpaid.
- Regarding permanent/discontinuous workers. The Social Security regulations are reformed to include the reference to the “last call to work”. To guarantee that the amount of the benefit corresponds to the salary actually received by the worker in his actual period of activity.
- The contribution rules should be reformed to allow caregivers to maintain their contribution base at the same level as their salary. Thus, their pension rights will not be reduced.
- The process of equalizing the right to a widow’s or widower’s pension for unmarried couples is completed. Initiated in the Pension Agreement. Within 6 months, the “equalization” of the conditions of access of this group to those of married couples will be regulated.
- The legal guarantee provided for in the 2011 pension agreement (previous agreement on Social Dialogue) will be extended indefinitely. So that those workers who have been dismissed before 2013 and who have not been able to rejoin the labor market will have the right to opt for the retirement legislation that is most beneficial to them to be applied.
New measures applicable to the retirement pension
Depending on the type of retirement.
Voluntary early retirement
The reduction coefficients for early retirement are revised. These coefficients will become monthly (currently they are quarterly). Longer contribution careers will be treated more favorably.
The Government will reduce the pension by 21% for those who bring forward their retirement by two years.
With the new agreement, early retirement is further discouraged.
Table of new reduction coefficients for voluntary early retirement:
Contributed period: | Less than 38 years and 6 months. | Less than 41 years and 6 months | To 44 years and 6 months |
From 44 years and 6 months or more |
Months of early retirement |
% reduction | % reduction | reduction % |
% reduction |
24 |
21,00 | 19,00 | 17,00 | 13,00 |
23 | 17,60 | 16,50 | 15,00 |
12,00 |
22 |
14,67 | 14,00 | 13,33 | 11,00 |
21 |
12,57 | 12,00 | 11,43 |
10,00 |
20 |
11,00 | 10,50 | 10,00 |
9,20 |
19 |
9,78 | 9,33 | 8,89 | 8,40 |
18 | 8,80 | 8,40 | 8,00 |
7,60 |
17 |
8,00 | 7,64 | 7,27 | 6,91 |
16 | 7,33 | 7,00 | 6,67 |
6,33 |
15 |
6,77 | 6,46 | 6,15 | 5,85 |
14 | 6,29 | 6,00 | 5,71 |
5,43 |
13 |
5,87 | 5,60 | 5,33 | 5,07 |
12 | 5,50 | 5,25 | 5,00 |
4,75 |
11 |
5,18 | 4,94 | 4,71 | 4,47 |
10 | 4,89 | 4,67 | 4,44 |
4,22 |
9 |
4,63 | 4,42 | 4,21 | 4,00 |
8 | 4,40 | 4,20 | 4,00 |
3,80 |
7 |
4,19 | 4,00 | 3,81 | 3,62 |
6 | 4,00 | 3,82 | 3,64 |
3,45 |
5 |
3,83 | 3,65 | 3,48 | 3,30 |
4 | 3,67 | 3,50 | 3,33 |
3,17 |
3 |
3,52 | 3,36 | 3,20 | 3,04 |
2 | 3,38 | 3,23 | 3,08 |
2,92 |
1 |
3,26 | 3,11 | 2,96 | 2,81 |
0 | – | – | – |
– |
Involuntary early retirement
Involuntary early retirement is the one resulting from non-voluntary termination of employment, dismissal as a result of a restructuring in the company. This type of retirement is available to workers who have been affected by:
- a collective dismissal
- an objective dismissal
- or by the death or retirement of the employer, among others.
The agreement extends the causes of dismissal for accessing this modality to all objective causes. Forced transfers, termination of contract due to non-payment by the employer, supervening unsuitability, substantial modification of working conditions, failure to adapt to technical modifications.
The agreement also establishes monthly coefficients, instead of quarterly. And, in the two years immediately prior to the ordinary retirement age, the same coefficients will be applied to determine the voluntary early retirement pension as in the voluntary mode in those cases in which the new coefficient is more favorable than the previous one.
Table of the new coefficients.
Contributed period: | Less than 38 years and 6 months | Less than 41 years and 6 months | To 44 years and 6 months |
From 44 years and 6 months or more |
Months of early retirement |
% reduction | % reduction | reduction % |
% reduction |
48 |
30,00 | 28,00 | 26,00 | 24,00 |
47 |
29,38 | 27,42 | 25,46 |
23,50 |
46 | 28,75 | 26,83 | 24,92 |
23,00 |
45 |
28,13 | 26,25 | 24,38 | 22,50 |
44 | 27,50 | 25,67 | 23,83 |
22,00 |
43 |
26,88 | 25,08 | 23,29 | 21,50 |
42 | 26,25 | 24,50 | 22,75 |
21,00 |
41 |
25,63 | 23,92 | 22,21 | 20,50 |
40 | 25,00 | 23,33 | 21,67 |
20,00 |
39 |
24,38 | 22,75 | 21,13 | 19,50 |
38 | 23,75 | 22,17 | 20,58 |
19,00 |
37 |
23,13 | 21,58 | 20,04 | 18,50 |
36 | 22,50 | 21,00 | 19,50 |
18,00 |
35 |
21,88 | 20,42 | 18,96 | 17,50 |
34 | 21,25 | 19,83 | 18,42 |
17,00 |
33 |
20,63 | 19,25 | 17,88 | 16,50 |
32 | 20,00 | 18,67 | 17,33 |
16,00 |
31 |
19,38 | 18,08 | 16,79 | 15,50 |
30 | 18,75 | 17,50 | 16,25 |
15,00 |
29 |
18,13 | 16,92 | 15,71 | 14,50 |
28 | 17,50 | 16,33 | 15,17 |
14,00 |
27 |
16,88 | 15,75 | 14,63 | 13,50 |
26 | 16,25 | 15,17 | 14,08 |
13,00 |
25 |
15,63 | 14,58 | 13,54 | 12,50 |
24 | 15,00 | 14,00 | 13,00 |
12,00 |
23 |
14,38 | 13,42 | 12,46 | 11,50 |
22 | 13,75 | 12,83 | 11,92 |
11,00 |
21 |
12,57 | 12,00 | 11,38 | 10,00 |
20 | 11,00 | 10,50 | 10,00 |
9,20 |
19 |
9,78 | 9,33 | 8,89 | 8,40 |
18 | 8,80 | 8,40 | 8,00 |
7,60 |
17 |
8,00 | 7,64 | 7,27 | 6,91 |
16 | 7,33 | 7,00 | 6,67 |
6,33 |
15 |
6,77 | 6,46 | 6,15 | 5,85 |
14 | 6,29 | 6,00 | 5,71 |
5,43 |
13 |
5,87 | 5,60 | 5,33 | 5,07 |
12 | 5,50 | 5,25 | 5,00 |
4,75 |
11 |
5,18 | 4,94 | 4,71 | 4,47 |
10 |
4,89 | 4,67 | 4,44 |
4,22 |
9 |
4,63 |
4,42 | 4,21 | 4,00 |
8 | 4,40 | 4,20 | 4,00 |
3,80 |
7 |
4,19 | 4,00 | 3,81 | 3,62 |
6 | 3,75 | 3,50 | 3,25 |
3,00 |
5 |
3,13 | 2,92 | 2,71 | 2,50 |
4 | 2,50 | 2,33 | 2,17 |
2,00 |
3 |
1,88 | 1,75 | 1,63 | 1,50 |
2 | 1,25 | 1,17 | 1,08 |
1,00 |
1 |
0,63 | 0,58 | 0,54 | 0,50 |
0 | – | – | – |
– |
Early retirement on the basis of activity
Workers in certain sectors or activities that are especially dangerous or unhealthy, and have high mortality or morbidity (illness) rates, can currently retire before reaching the legal age. Provided that they can prove that they have performed such activity and have done so for the minimum time legally established. This situation is currently established by the law in force at present. The agreement signed will modify the application procedure, will agree, within the framework of social dialogue, on a review of the objective indicators that measure hardship, and requires that the files currently open must be resolved within six months.
Delayed retirement
The Social Security plans to pay up to €12,000 per year to those who delay their retirement beyond the ordinary retirement age.
There are three types of incentives, at the choice of the person retiring, for each year of delay:
- to receive 4% more pension. This will be added to the corresponding amount according to the years contributed and the usual regulatory base will be applied.
- a specific amount to be determined, which rewards the longest contribution careers.
- or a combination of both options.
Active retirement
In relation to this type of retirement (which makes it possible to combine the payment of the public pension with work), it has been agreed that it will be reviewed in a maximum of 12 months in order to favor the maintenance of the activity of older workers.
A novelty is that it will be required, as a condition for accessing it, at least one year after reaching the ordinary retirement age.
Forced retirement
Clauses that force workers to retire at an age lower than 68 years are prohibited. In addition to the aforementioned age or higher, they must always have accrued the right to 100% of the retirement pension. At least one other worker must be hired indefinitely and on a full-time basis.
Another new feature is the following exception. The limit of 68 years of age may be lowered to the legal retirement age in the event that women in any activity of the company account for less than 20%. In this case, the worker must be replaced by a woman. Also indefinitely and on a full-time basis.
Agreements which currently include forced retirement clauses may be applied up to three years after the end of the agreement.
Arrabe Integra
Labour Consulting and HR Management.