Most of the efforts devoted to the 2011-2013 and 2021-2024 pension reforms were aimed at raising the real retirement age, reducing the costs of early retirement in order to take advantage of the potential of the older workforce, and trying to ease the costs of delayed retirement. The reform of José Luis Escriva, former Minister of Social Security, toughened the penalties for voluntary access to early retirement while offering bonuses to those who extend their retirement beyond the ordinary age. Some complements the gradual increase in the legal retirement age, implemented in the last decade. Early retirements have fallen below 30%, whereas they previously represented almost half of registrations in the system. And delayed retirements have doubled to around 10%. Although the results seem positive, Employees are not as committed as expected and their deferred retirements represent only 6%, a slight increaseand it is the self-employed who truly have access to active retirement. But the government wants to go further with the latest pact with social workers.
The reform led by Escrivá had an impact double effect if the “case by case” is analyzed differentiated by types of workers. The sanctions have increased from a minimum reduction of 1.6% and a maximum of 16% of the pension to a range of between 2.8% and 21%, depending on the worker’s contribution period. Before, this was not an obstacle for the self-employed, and it is no longer one after the tightening: early retirements of the self-employed represent around 15% of the total.
It caused a significant drop among the self-employed group, where the proportion of employees who are bringing their retirement forward has fallen by 15 points in five years (31% cumulative up to July). This trend among employees has “dragged” the system average downwards (28.5% cumulative up to July)as Minister Saiz boasted last week before the Congress of Deputies. Thus, the pension cuts intended to anticipate the voluntary exit from the labor market have had a dissuasive effect.
Postponing retirement had the opposite effect. This type of active retirement for self-employed workers was already very present in this group of workers. The incentives worked. That is, the additional 4% of pension for each year of delay or a cash “check” while you receive a percentage of the pension combined with the income from the activity. The percentage of delayed rejections increased from less than 12% to more than 27% of all rejections.
Some data that could be improved
But the government’s pending task remains that of salaried workers: neither incentives nor the possibility of receiving a salary and a pension have influenced the decision to retire. If before the reform deferred discharges were of the order of 3%, today they barely exceed 6% of the total number of employees. This percentage can be improved with the aim of limiting retirement spending in the coming decades, while hoping to further reduce early retirements. This was stated by the current governor of the Bank of Spain, José Luis Escriva, when presenting his long-term projections for retirement spending: deferred retirements are the former Minister of Social Security’s “great asset”.
The Ministry of Social Security has recovered this year the details that had no place in the reform of the previous legislature, which was divided into two parts and was finally approved urgently in March 2023, at the limit to receive the European funds designated by the. European Commission for this purpose. One of the four branches was the reform of partial retirement, with a relief contract to leave work gradually or delayed, allowing a salary and a certain percentage of the pension.
In turn, makes the pension bonus more flexiblewhich will now be an additional 2% every six months and no longer 4% for each year of delay (starting from the second year of delay). In the case of active retirement, it makes the incentives for cumulative delay compatible and allows 45% of the pension to be received in the first year… and 100% of the benefit when the worker accumulates five years by deferring retirement at the full rate. For self-employed workers with employees, even if a reduction is applied compared to the previous legislation, it will be more favorable: it allows them to receive 75% of the pension, a percentage that increases by five points for each year of activity.
Au pair, The government wants to avoid the sudden departure of salaried workers from the labour market with a new regulation of partial retirement with a replacement contract to which all sectors will have access and not just the manufacturing industry. In this way, Social Security wants to further eradicate early retirement: it will allow a reduction in the worker’s working day of between 20% and 33% in the first year for those who anticipate their retirement by more than two years. In exchange, the company must create a job with a replacement on a full-time permanent contract who must remain in the company for at least two years.
In any case, the agreement reached by the government, employers and unions in the framework of social dialogue still has to go through the parliamentary process. It is in the Congress of Deputies that it does not have, so far, the necessary support for its approval and implementation.
