New Regulations for Pension Compatibility with Employment Effective April 1
Significant changes in active, deferred, and partial retirement options announced by the government take effect tomorrow.
Commencing April 1, 2025, a new phase of pension reform will be implemented in Spain following an agreement reached by the government, business groups, and trade unions on December 23, 2023. This reform, published in the Official State Gazette (BOE) on December 24, introduces numerous modifications affecting the modalities of active, deferred, and partial retirement arrangements.
The adjustments are primarily centered on altering the requirements for workers wishing to combine employment with receiving a portion of their pension.
ACTIVE RETIREMENT
Under the active retirement scheme, individuals can combine work and a portion of their pension, provided their retirement occurs no less than one year after reaching the legal retirement age which, in 2025, is set at 66 years and 8 months for those with less than 38 years and 3 months of contributions, or 65 years for those with 38 years and 3 months or more.
From April 1, 2025, access to this form of retirement will no longer require workers to have a complete career that qualifies them for 100% of their regulatory base.
Previously, the minimum contribution period was 36 years and 6 months to qualify for active retirement, but under the new rules, individuals with shorter careers will also be eligible.
An important change is that this retirement scheme will now be compatible with incentives for delaying retirement that have been in place since 2022.
Both salaried employees and self-employed individuals will be eligible for this modality, while public sector workers and high-ranking officials remain excluded.
The calculation of pension amounts will also change.
Starting April 1, those who delay retirement by one year will receive 45% of their recognized initial pension; a two-year delay will yield 55%; a three-year wait will provide 65%; four years will amount to 80%; and, from the fifth year onward, individuals may receive 100% of their pension while continuing to work.
Moreover, individuals choosing this active retirement will see their pension increased by five percentage points for each full year spent in active retirement, with the increase capping at 100% of the pension.
For self-employed individuals, who previously could receive 50% of their pension while working, this percentage will now align with that of salaried workers, with the exception that they will receive 75% of their initial pension if they delay their retirement between one and three years while employing an indefinite contract for a worker with at least 18 months of service or hiring someone new with whom they have had no prior employment relationship in the last two years.
DEFERRED RETIREMENT
For those opting for deferred retirement—beginning their pensions after the legal retirement age—new incentives come into effect on April 1. Previously, individuals had to work for a full year past the legal retirement age to receive a 4% increase in their pension.
Under the new regulation, this supplement will be accessible every six months (2% every six months) instead of annually.
This enhancement, active since 2022, may also be cashed as a lump sum per year of retirement delay, ranging from nearly €4,800 to €12,000, depending on the worker’s regulatory base.
Additionally, retirees can combine semiannual payments with the lump sum option.
Another key update is the possibility to simultaneously enjoy both the enhancements to pensions for delaying retirement and the active retirement scheme.
Previously, these two conditions were mutually exclusive.
PARTIAL RETIREMENT
In cases of partial retirement—where the worker reduces both their working hours and proportional salary, supplemented with a corresponding percentage of their pension—the new reform allows individuals to retire up to three years earlier than the legal retirement age, a change from the current rule that permits only a two-year advance.
In the first year, a worker may reduce their hours by between 20% and 33%, and from the second year onward, reductions can range from 25% to 75% of their working hours.
Additionally, the contract for a new replacement worker, who will cover the hours not worked by the partially retired individual, must be permanent and full-time.
Workers in partial retirement will also have the option to accumulate their reduced working hours as agreed with their employer.
The adjustments are primarily centered on altering the requirements for workers wishing to combine employment with receiving a portion of their pension.
ACTIVE RETIREMENT
Under the active retirement scheme, individuals can combine work and a portion of their pension, provided their retirement occurs no less than one year after reaching the legal retirement age which, in 2025, is set at 66 years and 8 months for those with less than 38 years and 3 months of contributions, or 65 years for those with 38 years and 3 months or more.
From April 1, 2025, access to this form of retirement will no longer require workers to have a complete career that qualifies them for 100% of their regulatory base.
Previously, the minimum contribution period was 36 years and 6 months to qualify for active retirement, but under the new rules, individuals with shorter careers will also be eligible.
An important change is that this retirement scheme will now be compatible with incentives for delaying retirement that have been in place since 2022.
Both salaried employees and self-employed individuals will be eligible for this modality, while public sector workers and high-ranking officials remain excluded.
The calculation of pension amounts will also change.
Starting April 1, those who delay retirement by one year will receive 45% of their recognized initial pension; a two-year delay will yield 55%; a three-year wait will provide 65%; four years will amount to 80%; and, from the fifth year onward, individuals may receive 100% of their pension while continuing to work.
Moreover, individuals choosing this active retirement will see their pension increased by five percentage points for each full year spent in active retirement, with the increase capping at 100% of the pension.
For self-employed individuals, who previously could receive 50% of their pension while working, this percentage will now align with that of salaried workers, with the exception that they will receive 75% of their initial pension if they delay their retirement between one and three years while employing an indefinite contract for a worker with at least 18 months of service or hiring someone new with whom they have had no prior employment relationship in the last two years.
DEFERRED RETIREMENT
For those opting for deferred retirement—beginning their pensions after the legal retirement age—new incentives come into effect on April 1. Previously, individuals had to work for a full year past the legal retirement age to receive a 4% increase in their pension.
Under the new regulation, this supplement will be accessible every six months (2% every six months) instead of annually.
This enhancement, active since 2022, may also be cashed as a lump sum per year of retirement delay, ranging from nearly €4,800 to €12,000, depending on the worker’s regulatory base.
Additionally, retirees can combine semiannual payments with the lump sum option.
Another key update is the possibility to simultaneously enjoy both the enhancements to pensions for delaying retirement and the active retirement scheme.
Previously, these two conditions were mutually exclusive.
PARTIAL RETIREMENT
In cases of partial retirement—where the worker reduces both their working hours and proportional salary, supplemented with a corresponding percentage of their pension—the new reform allows individuals to retire up to three years earlier than the legal retirement age, a change from the current rule that permits only a two-year advance.
In the first year, a worker may reduce their hours by between 20% and 33%, and from the second year onward, reductions can range from 25% to 75% of their working hours.
Additionally, the contract for a new replacement worker, who will cover the hours not worked by the partially retired individual, must be permanent and full-time.
Workers in partial retirement will also have the option to accumulate their reduced working hours as agreed with their employer.
Translation:
Translated by AI
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
