A very common question that many workers have is knowing what the approximate amount of their pension will be when they retire. Have you heard about how the new regulation approved by the government this year will affect the amount of your pension?
Minimum Requirements for Retirement Pension
The calculation of retirement pensions is dynamic and changes over time. To access ordinary retirement in Spain, it is necessary to meet two fundamental requirements: reach a certain age and have a minimum period of contributions. If you meet all the requirements established by the General Social Security Law (RD Leg. 8/2015, October 30th) to qualify for a contributory Spanish retirement pension, the amount will be determined by applying a percentage to the regulatory base based on the time contributed according to the law.
Calculation of the Regulatory Base
The regulatory base, according to the current regulations approved in 2023 (RD-ley 2/2023), is calculated by dividing your 300 highest contribution bases for the 350 months immediately preceding the month before the event causing the pension. For example, if you apply for the pension on June 29, 2023, when you have turned 66 years and 4 months old, the contributing bases are the 300 bases counted backward from April 2023. The bases corresponding to the twenty-four months immediately preceding the month before the event causing the pension will be included at their nominal value; the rest will be updated according to the evolution of the Consumer Price Index. Starting from 2026 and over the next two decades, there will be a double alternative for the interested party: applying this formula or, if it is more beneficial for the future retiree, taking a longer period until reaching the last 29 years (348 months) in 2037, of which Social Security will exclude the two "worst," leaving a total of 27 years (324 months) as the reference period for the regulatory base at the end of the transitional period. This change in the calculation of the regulatory base will be implemented as follows:
- From January 1, 2026: The retirement pension's regulatory base will be the result of dividing the sum of the 302 highest contribution bases for the 304 months immediately preceding the month before the event causing the pension by 352.33.
- From January 1, 2027: Sum the best 304 bases (chosen from 308) and divide this figure by 354.67.
- From January 1, 2028: Sum the best 306 bases (chosen from 312) and divide this figure by 357.
What Percentage Is Applied to the Regulatory Base?
Percentages are applied to the regulatory base, determined by the number of years contributed to the Spanish social security system. For pensions recognized in 2023, the following rules apply in the percentage calculation:
- For the first 15 years contributed, 50 percent.
Keep in mind that if you access retirement early, reduction coefficients will be applied that will reduce the amount of your lifelong pension. On the other hand, if you decide to continue working beyond the ordinary retirement age, you may be entitled to an additional 4 percent for each complete year contributed between the age you reach the ordinary retirement age and the time you apply for the pension.
If you need assistance in calculating your pension, contact us. We guide you and help you make the right decisions for your future or your company's future.