Spanish government considering paying €12,000 per year retirement is postponed

The Minister of Social Security, José Luis Escrivá, announced yesterday that the Spanish government is studying incentives for workers who decide to continue working beyond retirement age. Among the proposals are an annual payment of up to €12,000 or increasing pension payments by 4% for workers who decide to remain active despite having the right, due to age and years worked, to retire.

Specifically, the additional pay per year would range between €4,700 and €12,060, according to the figures provided by the minister. It should be borne in mind, however, that the proposals put forward on Monday by Escrivá in the Spanish Parliament are not a final proposal. In fact, they have not even been discussed by the cabinet, as the executive is still negotiating with unions and employers.

Escrivá also explained that the Spanish government is considering imposing tougher penalties for workers who want to retire early. The executive has proposed voluntary early retirements lose up to 17% on their pension, over four times higher than the current 4%. The executive wants to discourage this type of retirements because they are common in workers who go on to collect high pensions, of €2,100 per month or more, as reported by La Vanguardia.

Social Security also wants penalties to be applied for each month of advanced retirement and not per quarter, as is currently the case, both in the event that a person retires voluntarily before their due date and if they are forced to do so. However, Escrivá assured that the new penalty system will be more gradual, that is, with proportionally higher penalties the earlier retirement is taken, which will benefit workers "in most cases".

For the government, the aim is for the legal age and the real age of retirement to be as similar as possible in order to lengthen the number of years that the average worker contributes to Social Security. The reform of Social Security is one of the points that the European Commission has been demanding from Spain for years, as it considers that the current system of state pensions is not sustainable in the long term

The government also wants to eliminate the forced retirement by agreement and keep it only for workers over 68.

Updating pensions following CPI

Escrivá also proposes that pensions should be updated every year in accordance with CPI, the consumer price index, the indicator that shows how much the prices of basic products and services rise for families. Thus, if inflation is positive, pensions would go up; however, if a year ends with a negative CPI, it would be compensated for in the following three years.