These are the seven legal novelties in contributions and pension plans

The main labor news of the active workers Y pensioners have been analyzed by Lefebvre, provider of expert legal content in Spain, which has compiled and analyzed these matters in the Social Memo 2022 Y Retirement Practical Keys: modalities, access requirements, amount and compatibility with the job.

Both are reference works for the public administration, offices, businessmen, personnel managers in the company; labor advisors, financial advisors and other professionals related to the labor field.

The experts from Lefebvrehighlight the seven main novelties regarding contributions, pension plans and planning for the future:

1. The rise in the SMI and its impact on the pension system

It implies a rise in the minimum bases in the same proportion (3.5%), so the new minimum contribution base will be around 1,166 euros, although the 2022 listing order has not yet been published in the BOE. This change not only affects Social Security contributions, so necessary for future pensions, but in the case of workers whose salary is equal to the SMI, this increase will be appreciated in the net salary to be received.

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2. Payroll and contribution bases

The new increased contribution bases are the ones that will be used to calculate the amount that corresponds to pay the worker to Social Security and is reflected in the payroll. If the increase in the bases is accompanied by a salary increase, as in the case of workers with a salary equal to the SMI, this increase will be appreciated in the net salary to be received; that is, they will charge more. On the contrary, for those workers who are not in the minimum and whose salaries are not increased, the increase in the bases that is expected in the new contribution order could imply, in some cases, a reduction in the net salary to be received.

3. Revaluation of pensions

As of January 1, 2022, contributory pensions, including the amount of the minimum pension and that do not exceed the limit of 37,904.86 euros, will be updated at the beginning of each year in the percentage equivalent to the average value of the rates of interannual variation expressed as a percentage of the CPI for the 12 months prior to December of the previous year.

These changes and plans are made with the intention that present and future pensioners and beneficiaries of non-contributory pensions have guaranteed economic sufficiency.

4. How many years must be contributed to retire with the full amount?

This year, the reference period of the pension is calculated on the contribution basis of the 25 years prior to the triggering event. To retire with a 100% or full pension it is necessary to have contributed for 36 years, reaching 37 years in 2027.

5. Are there penalties for workers who retire earlier?

Disincentives are not always penalties since, in some situations, early retirement can be beneficial. In the event of voluntary early retirement, if the regulatory base is higher than the limit of the initial amount of the pensions, the reduction coefficients are applied to the aforementioned limit and not to the amount of the pension resulting from applying to the regulatory base the percentage that corresponds to months of contribution. This change is not immediate, but will be made progressively, over a period of 10 years, from January 1, 2024.

6. When is it most beneficial to retire early?

The new reduction coefficients are set by months, not by quarters, so they may be more favorable than the previous ones in voluntary and involuntary early retirement. It is expected that, in two years immediately prior to ordinary retirement age, the same coefficients are applied as in the voluntary modality, in those cases in which the new coefficient is more favorable than the one in force up to now. In addition, the reduction coefficient corresponding to each of the six months prior to the ordinary retirement age is lowered.

In the case of voluntary retirement, they usually penalize more than the coefficients associated with involuntary early retirement, but it is allowed, for example, the application of the reduction coefficients corresponding to this last modality (more beneficial) in case of receiving unemployment benefit at least three months before early retirement.

7. Benefits for workers who delay their retirement

Certain advantages associated with those workers who want to delay their retirement after 36 or 37 years of minimum contribution have been established, such as the possibility that the interested party may choose between obtaining an additional percentage of 4% for each full year of effective work that they certify with after reaching the normal retirement age.

Also a lump-sum amount for each full year of effective accredited and contributed work between the date of reaching retirement age and the date of the event causing the pension, or a combination of the two previous options. However, no bonus is specifically provided for the self-employed, since the RGSS regulations apply in this matter.

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