Some contributors have been compensated by using the statutory discount to advance their retirement to secure the 8.5% rise in CPI
When the next pension is paid out at the end of January, the benefit will be increased exponentially: 8.5% more. The escalation of inflation has led to a historical reappraisal, to the extent that a proportion of workers approaching retirement age have begun to consider early retirement in order to take advantage of this pension increase, even at the expense of social security apply legal penalty established for advancing their retirement before the age determined by current regulations. In any case, it is an alternative that, once the year 2022 has been closed and the revaluation has started, will no longer make sense for future retirees.
The calculators of some of these citizens have been smelling in recent weeks, as they checked how much their pension would remain with this change in the amounts in force since January 1, as approved by the government at the end of 2022 At the public administration do they assume that this movement existed and cases could have been recorded, albeit never en masse.
Only when Social Security has the December pension data on the table will it reveal how many citizens have preferred to advance their retirement using this modality. In reality, there may be instances of contributors who thought about it but didn’t really realize that decision afterwards. The experts consulted by this paper emphasize that the races are long and full of peculiarities, so that before final decisions are made, every particular must be carefully studied.
The bills made by some contributors, those closest to retirement, have been taking the 8.5% guaranteed raise for all benefits starting this month as a benchmark. For a pension of, for example, 1,500 euros, that becomes approximately 1,627 euros. Or the maximum, until last year 2,820 euros, is already above 3,059 euros.
With these legally guaranteed amounts, the counterpart of early retirement implies the application of the corresponding reduction coefficients, depending on the number of months the employee advances his retirement compared to the legal retirement age. In general, and to save the case histories, the reduction in pension can range from 2.8% at one year’s expected retirement (if you contributed 44 years and six months) to 21% for those who retired two years earlier retire (less than 38 years old). year contribution).
In all this range of possibilities, those who have advanced their retirement by up to a year will have received a penalty set in the vicinity of 5% (more precisely between 4.75% and 5.50% depending on the years stated) . That initial reduction was even less than the 8.5% increase in pensions related to the increase in inflation. If this advance is made one to six months earlier than it would normally be, the reduction determined is about 3%, also less than what pensions have increased this year.
In this way, the increase that will occur with the payment of this pension month would in many cases have completely compensated for the reduction due to the application of the reduction coefficients for early retirement a few months before the normal statutory retirement age.
It’s about a decision that must have been thought through as they remember several advisors. Once retirement is reached, there is no going back and the living conditions of many of the contributors may need to be adjusted to economic conditions which may be attractive now but could lead to complex situations in the medium or long term.
The latest pension reform, which has now started a year ago, stipulates that early retirement is possible with discounts that are predetermined for each month taken into account, and not per quarter, as was the case with the previous legislation.
In addition, under current regulations, new pensioners can choose the starting date of the old-age pension within a period of three months before and after the day of submission of the pension application or coincide with that day. If the applicant is enrolled in one of the schemes of the social security system, the old-age pension is assumed to have accrued exactly on the same day as the withdrawal from the corresponding scheme due to the cessation of self-employment or employment .
Early retirements have had a lower weight with respect to all those made in 2022 compared to those of previous years. In the absence of the final data for the month of December, including those made to take advantage of the revaluation of pensions, withdrawals before expected legal age represent a third of all, according to the latest data from Social Security.
This record in 2022 contrasts sharply with previous years in which early retirements accounted for up to 44% of all retirements, as happened in 2016. Since then, this rate has gradually decreased to 34%.
Much the same has happened, albeit in the opposite direction, with the actual age at which Spaniards retire. In 2022, they did so at almost age 65 (statistically at 64.8 years). At that age, exit from the active labor market actually takes place. And that is different – lower – than the legal age, ie the age that determines the standard for retirement. In 2022, the legal age was 66 years and two months. Since this month of January, at 66 years and four months. The age of 67 will be reached in 2027, although the actual number will probably be several months lower, precisely because of the early retirement.
The rise in the real retirement age and lower rates of early retirement are some of the effects left behind by the latest pension reforms.
The requirements for anticipation have changed significantly in recent years. To be entitled to voluntary early retirement, a series of requirements must be met, including having at least 35 years of contributions, two of which must have been taken in the 15 years preceding the retirement date, as well as that the amount corresponding to the receiving a pension is higher than the minimum pension he would receive when he turns 65.
In case of non-voluntary early retirement (e.g. through an ERE) the early period is extended to 48 months before the normal legal age to access the pension. For example, an employee can take voluntary early retirement at age 61 if they have contributed for 37 years and nine months or more. If you pay contributions under that period, the retirement age in 2023 will be 62 years and four months.
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
