Delaying retirement is essential for the public pension system to be sustainable and the pension reform that will come into force next year is aimed at achieving this objective.
The Minister of Social Security Jose Luis Escrivá aims to bring the real retirement age, which is now around 64.5 years old, closer to the real age which this year is 66. In addition, the pension reform approved by the Government of Rajoy in 2013 establishes a transitional period to increase the retirement age by two months each year until reaching 67 years in 2027.
Thus, workers who retire in 2022 will work two months longer than those who have retired in 2021. The ordinary retirement age next year will be 66 years and two months.
Nevertheless, Those who want to retire at 65 and collect 100% of their pension may do so provided they have contributed 37 years and 6 months or more.
Those who choose to ignore Escrivá’s demands and prefer to retire early by sacrificing part of their pension can qualify for the voluntary early retirement. They can do it from the age of 63 or 64 years and 2 months, depending on the years of contribution that they prove.
If it is an involuntary or forced early retirement, it can be done from 61 or 62 years and two months, depending on the number of years they have contributed.
Changes in reducing coefficients
In these cases, it must be taken into account that the pension reform has modified the reducing coefficientss that will apply to those who retire early from 2022, both for voluntary and forced early retirement.
Coefficients they become monthly instead of quarterly and will be applied to the amount of the theoretical pension -calculated based on the number of years that they have contributed and the contribution bases- and not on the regulatory base as is the case now.
This new measure will affect more those who contribute for bases higher than the maximum pension and that, therefore, “the theoretical pension calculated before applying the coefficients for early retirement is higher than the maximum pension,” say sources from the BBVA Pensions Institute.
However, in these cases, coefficients will be applied gradually over a period of 10 years, counting from January 1, 2024.
Advancing retirement 23 and 24 months penalizes more
The new coefficients for voluntary early retirement are better than those existing so far in almost all cases, except in those of anticipating it 23 and 24 months, the maximum possible, and in those of advancing it only three months or less.
Incentives for working longer
To encourage workers to delay their retirement, the new pension reform establishes, starting next year, incentives aimed at those who delay retirement beyond the ordinary age.
They will be able to choose between three options. The first is a 4 percent additional pension for each full year of delay quoted with respect to ordinary age.
For Enrique Devesa, Professor at the University of Valencia and member of the Institute for Economic Research (IVIE), this measure “remains at a level well below the actuarially fair level -the resulting amount between what the worker contributes and what the worker receives- and only applies over full years of delay instead of over months. “
For it to be fair, increasing coefficients of 0.6 percent per month of delay should have been applied, that is, 7.2 percent per year, says the expert.
A single check
The second option is based on perceiving a single capital for each year of delay, depending on the amount of the pension and the duration of the contribution career. This quantity It will range between a minimum of 4,786.27 euros and a maximum of 12,060.12 euros, for each year of delay.
The third option is a mixed formula that combines the two previous proposals
These three incentives improve the ones that exist now. They consist of granting the beneficiary an additional percentage to the pension for each full year of contributions between the date they reached the ordinary retirement age and the date of retirement.
The additional percentage is 2 percent for each full year of contributions, when the interested party accredits up to 25 years of contributions upon reaching the ordinary retirement age.
It rises to 2.75 percent when the worker accredits between 25 and 37 years of contributions and reaches 4 percent when they have contributed more than 37 years.