Pensions will rise with inflation and retirement rules change

Automatic summary, not yet reviewed

1. Contributory pensions are adjusted each year based on the average inflation of the previous year. If inflation is negative, pensions do not go down. The same applies to State civil service pensions.
2. The sustainability factor is repealed and replaced by an intergenerational equity mechanism: from 2023, for ten years, an additional 0.6 percentage point contribution goes to the Social Security reserve fund, and from 2032 every three years it is checked whether projected spending in 2050 exceeds a threshold, applying measures if it does.
3. Rules for voluntary and involuntary early retirement change: reduction coefficients apply by months of early retirement and to the pension amount, more causes now allow involuntary early retirement, and the coefficients for retirement based on the type of work and for disability are revised.
4. Those who delay retirement can choose between an additional 4% of pension for each year worked, a lump sum per year, or a combination of both. In addition, they are exempt from contributing for common contingencies after reaching ordinary retirement age.
5. People who took early retirement between 2002 and 2021 with at least 44 years and 6 months of contributions (or 40 years if their pension was under €900) receive a supplement that the administration will recognize on its own initiative.
6. Other measures: mandatory retirement clauses before age 68 are banned, employers get a 75% reduction in contributions for temporary disability of workers aged 62 or over, surviving partner pensions are extended to unmarried couples in exceptional cases, and a State Agency of Social Security Administration is to be created.

Who it affects

• Pensioners: Their pensions rise each year with inflation and do not fall if there is deflation.
• Workers close to retirement: Requirements and reductions for retiring before or after ordinary retirement age change.
• Employers: New additional contributions, contribution reductions for workers over 62, and limits on mandatory retirement clauses.
• Unmarried couples (parejas de hecho): Their access to the surviving partner pension is clarified and recognized in exceptional cases.
• People with disabilities: They can retire early using specific reduction coefficients.

Words worth knowing

Coeficiente reductor (reduction coefficient)

A percentage subtracted from the pension when you retire before the legal retirement age.

Factor de sostenibilidad (sustainability factor)

A former mechanism that adjusted pensions based on life expectancy; this law repeals it.

Base reguladora (regulatory base)

An amount calculated from your contribution bases used to set how much pension you receive.

Incapacidad temporal (temporary disability)

A situation where you cannot work due to illness or accident and receive a benefit (sick leave).

Fondo de Reserva (Social Security reserve fund)

A cushion of money set aside by Social Security to pay pensions in difficult times.

It summarizes the law as published in the BOE. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries