News ways of combining retirement and employment

Royal Decree-Law 11/2024 has introduced significant amendments, including in the regime for compatibility of retirement pensions with employment, which will come into force on April 1, 2025.

These amendments mainly benefit workers that want to and have the option to prolong their working life beyond retirement age, but they can also benefit companies wanting to keep their more experienced employees for longer in a case of talent shortage.

We highlight the following measures:

Possibility to earn a larger supplement due to delayed retirement (articles 210.2 and 3 Social Security Act)

The possibility to increase the established financial supplement for workers accessing the retirement pension at a later age is introduced. Until now it was only earned based on each complete year of contribution after reaching the ordinary retirement age. After the reform, from the second complete year of delay, the financial supplement can be generated for delayed periods of between six months and one year, assigning an additional 2% for these shorter periods.

Compatibility of pension with part-time work (article 213 Social Security Act)

Under the new regime, pensioners can combine their pension with part-time work, reducing the pension in inverse proportion to the reduced working hours.

Active retirement: incentives for delaying retirement (article 214 Social Security Act)

Active retirement enables the compatibility of pensions with any type of job, whether part time or full time or whether as an employee or a self-employed person. It is no longer necessary to have a complete contribution period (which entitles workers to a pension amount equal to 100% of the regulatory base) to access this. From now on, the pension amount will vary depending on the number of delayed years in accessing the pension.

Other amendments introduced lead to new opportunities for companies, particularly in the context of collective restructuring and retirement plans. These new developments affect partial retirement and can enable a gradual exit of senior staff, optimizing human resource management and improving company sustainability.

Flexible partial retirement arrangements (articles 215 Social Security Act and 12 Workers Statute)

One of the most significant amendments is the flexible partial retirement arrangement:

Access to partial retirement is made easier thanks to it being possible, in all cases, to apply for the pension three years before the ordinary retirement age.

The percentage of reduced working hours is increased from 50% to 75%; however, in cases in which access to retirement is carried out less than two years before the ordinary retirement age, the reduced working hours during the first year must be established between 20% and 33%.

The requirement that the relief contract signed as a result of the partial retirement must be indefinite and full time and that it must be maintained at least during the two years following termination of the partial retirement is generalized.

Accumulation of the working time of the partially retired person is expressly allowed in periods of days of the week, weeks of the month, months of the year and other periods, in line with the individual agreement or, if applicable, in line with the collective bargaining agreement.

Extension of partial retirement arrangements to manufacturing industry (fourth transitory provision Social Security Act)

Royal Decree-Law 11/2024 extends to companies in the manufacturing industry [those with codes in group C of the Spanish National Classification of Economic Activities (CNAE)] the possibility to continue benefiting from the most favorable partial retirement prior to Act 27/2011 in the case of pensions activated before January 1, 2030. This extension came into force on December 25, 2024.

All these amendments in the regime for compatibility of retirement pensions with employment can offer companies greater flexibility to design pre-retirement plans that adapt to both company and workforce needs, because reducing working hours and combining the pension with work through partial retirement enables a gradual transition for senior workers. This can help companies to plan in the long term, manage talent and transfer knowledge to the younger employees, ensuring an efficient transition.