Types of retirement

Retirement is one of the most worrying issues for workers. This is mainly due to the fact that its calculation can be somewhat complex and that there is a wide variety of different types. Therefore, in order to shed some light on the matter and to make everything more understandable, we are going to explain the different modalities that currently exist and that are included in Spanish legislation.

Requirements for obtaining a retirement pension

As of 1 January 2013, a new regulation of the pension system in Spain came into force, which established a series of new requirements for those workers who cease to work for reasons of age. These are:

1. To have reached the minimum retirement age. In general terms, this is 65 years of age, although it is true that between now and 2027 it will gradually increase to 67 years of age. In any case, workers with 38 years and 6 months of contributions can continue to retire at 65 and access early retirement models from the age of 61, and will receive the maximum according to the regulatory base. There are also special agreements that specify other ages, such as the mining industry agreement.

2. Covering the minimum contribution period. Specifically, this is 15 years, and it is compulsory to have contributed for at least two years within the last 15 years prior to applying for retirement. If this requirement is not met, the pensioner is transferred to the non-contributory pension scheme.

3. Social Security affiliation. It is possible to access retirement from a situation of registration or a situation assimilated to this. In some cases, it is also possible to obtain it without being registered.

4. There must be a causal event. The law contemplates a series of cases in which it is possible to obtain retirement without fulfilling the rest of the requirements, but they must take place on the day of the cessation of activity. These may be, for example:

- Transfer outside the national territory. The retirement requirements are met when the company transfers the worker's skills to another location abroad.

- Subscription to special agreements within the General Social Security Scheme. The worker meets the contribution and age requirements at the time of subscription to the special agreement.

- Forced leave of absence. This case is exclusive to public officials.

- Collection of unemployment benefit for workers over 52 years of age. The law gives people who receive this benefit the possibility of retiring at the same time as they reach the minimum age, which can vary between 60 and 65 years of age.

What are the types of retirement pensions in our country?

Now we are going to talk about the types of retirement pensions contemplated by law in our country. In this regard, a division must be made according to the criterion followed, which may be that of the contribution period or that of availability.

Retirement on the basis of the contribution period

A distinction is made between two types of pension:

1. Contributory pension. This corresponds to those who have met the minimum contribution criteria required by law. This is set at a minimum of 15 years, at least two of which must have been within the 15 years prior to applying for retirement, as explained above.

2. Non-contributory pension. This is granted to people who have not met the minimum contribution criteria required by law but who are in a situation of lack of resources and need to have a minimum financial support.

Retirement on the basis of availability

Having specified the above criterion, it is possible to go into detail on the availability criterion:

1. Full retirement. This is the one to which the worker is entitled when he/she fulfils all the requirements specified by law to obtain the retirement pension that corresponds to him/her. In addition, he/she must completely cease his/her work activity.

2. Partial retirement. Partial retirement is that in which a certain monthly amount is received from the Social Security System which, at the same time, is supplemented by the salary corresponding to a part-time job.

3. Early retirement. Earlier, we specified a series of criteria for early retirement. Specifically, it can be requested by employees who are at least 60 years of age and who are included in the General Scheme. In addition, this right is extended to those who were subject to a Mutualidad Laboral before 1 January 1967. From the age of 61, workers who have been registered as jobseekers for at least 6 months before applying for retirement and who can prove that they have contributed for 30 years or more are also entitled to this right, provided that they do not stop working of their own free will.

4. Retirement due to disability or retirement due to invalidity. This case is applicable to those who accredit an absolute, total or severe disability before reaching the relevant retirement age.

Calculation of the retirement pension

In order to calculate the retirement pension, it is necessary to take into account a series of aspects that will be key to determining the amount, which is none other than a certain percentage of the regulatory base depending on the time contributed by the worker.

Specifically, the factors that determine the amount are the regulatory base, the years of contribution, the age of the applicant, the percentage to be applied and the revaluation.

It should be borne in mind that, progressively, the regulatory base to be counted for the calculation will increase up to the last 25 years of contributions (350 months), whereas before 2013 it was set at 15 years. The end point of this process will take place in 2022.

Since the law dictates that the accounting period for the regulatory base will be 25 years, we will use this figure for our example. In this sense, with a working life in hand, it is necessary to add up the annual amounts of the regulatory base for those 25 years and divide them by 300, which are the months corresponding to that period of time. This will give the average amount. Subsequently, this figure must be divided by 350 and the result will be the amount to be received monthly.

This case is only applicable to those workers who have contributed the maximum established by law, which will be 38 years and 6 months. Thus, reduction percentages will have to be applied to the total calculation. In this sense, the average of the first 15 years will account for 50% of the amount, so the reduction is always applied to the rest.

The calculation of disability retirement and invalidity retirement is different, as the degree awarded by the medical tribunal plays a key role. In some cases, even if the other requirements are not met, it is possible to get 100%.

We hope we have been of help and that you have a better understanding of the different types of retirement in Spain and how they are calculated.