On 26th December 2024, the Spanish Council of Ministers approved a Royal Decree-Law introducing significant improvements in the regulation of active retirement, partial retirement, and deferred retirement, among other measures.
These reforms, resulting from the agreement reached at the Social Security and Pensions Social Dialogue Table in July 2024, aim to provide more flexible and progressive options for workers transitioning to retirement. The key aspects of the Spanish Royal Decree-Law on active and partial retirement set the pace for the new year.
The implementation of many of these regulations will occur throughout the year, making it essential to understand them in detail.
What are the new features of active retirement?
Active retirement, which allows workers to combine a pension with professional activity, has been significantly improved:
- Removal of the full contribution requirement: This change simplifies access to active retirement, particularly benefiting women, who often face less continuous contribution records due to caregiving responsibilities.
- Compatibility with deferred retirement incentives: Workers opting for active retirement can also benefit from incentives linked to deferred retirement. For every year of deferral, the pension percentage will increase, starting at 45% after one year and reaching 100% after five years or more.
- Progressive pension increase: Additionally, every 12 months of uninterrupted professional activity will result in a 5% additional increase in the pension percentage, capped at 100%.
These changes will allow workers to choose more flexible exit strategies from the labour market, aligning with models in other European countries.
What about partial retirement?
Partial retirement has also undergone significant adjustments aimed at broadening its scope and improving conditions for both workers and companies:
- Extension of the early option: The possibility of taking partial retirement up to three years before the ordinary retirement age has been extended from two years, with proportional adjustments in working hours.
- Requirements for replacement workers: The replacement contract must now be permanent and full-time, enhancing job stability for this group.
- Manufacturing sector: For workers in this sector, the current Spanish regulatory framework has been extended until 2029, with adjustments to facilitate a more balanced organisation of working hours for both the replacement worker and the partially retired employee.
The Spanish Government is expected to conduct an evaluation in 2028 to assess the impact of these measures and propose further improvements if necessary.
What does the new deferred retirement regulation entail?
Incentives for those opting to delay their retirement have also been enhanced:
- New incentive intervals: Additional benefits for deferral will now be calculated every six months from the second year onwards, instead of annually, providing greater rewards for extending working life.
These reforms align with the recommendations of the Toledo Pact, which aims to bring the effective retirement age closer to the statutory retirement age.
What other relevant changes are included in these reforms?
The new Spanish Royal Decree-Law also introduces additional measures to improve access to retirement:
- Seasonal workers: The multiplier coefficient of 1.5 in the qualifying period calculation has been reinstated, facilitating access to benefits such as retirement, permanent disability, and survivor benefits.
- Encouragement of flexible retirement: The Government must analyse the requirements needed to promote this modality within six months, fostering greater adaptability to individual worker needs.
When do these measures come into effect?
The changes related to partial retirement will take effect on 1 April 2025, while the improvements to active and deferred retirement are already in force.
What implications do these reforms have for companies?
These reforms not only affect workers but also require significant adjustments for businesses:
- Replacement worker contracts: Companies must ensure that these contracts are permanent and full-time, potentially necessitating changes in HR management.
- Work schedule organisation: In the case of partial retirement, manufacturing companies will have greater flexibility to reorganise schedules for replacement workers and partially retired employees.
- Specialised advice: Given the impact of these measures, obtaining proper guidance will be essential to ensure regulatory compliance and optimise workers’ transition to retirement.
If you need more information or advice on implementing these changes in your company, LEIALTA is here to help. Our team of labour law experts can assist you in ensuring compliance with these new regulations and minimising legal and administrative risks. Do not hesitate to reach out to us for further insights into the Spanish Royal Decree-Law and all matters related to active and partial retirement.
