Fedea urges the government to reform the system to extend the work phase and advocates abolishing income ceilings, creating a new employment contract compatible with the pension and allowing pensions à la carte
Barely 14% of workers who retire each year in Spain do so without leaving the labor market completely, but instead combining work with a pension, either as an employee of a company or as a self-employed person. This is a very low percentage, as Spanish legislation is designed with an approach of incompatibility between receiving a pension and doing paid work, according to Fedea’s complaint in a work published this Monday.
Moreover, Spain is one of the OECD countries where there is a lower percentage of workers aged between 60 and 69 who receive a pension and salary at the same time: barely 0.5% of men and 1.8% of women aged between 60 and 70 of that age make it compatible. For this reason, from this ‘thank you’ they are urging the government to “radically change the way we retire” as “we need to flexibly extend the work phase and we cannot continue wasting senior talent” .
In this sense, researchers José Ignacio Conde-Ruiz and Jesús Lasheras, authors of this report, warn that the regulation of retirement in Spain is “drastic” and has hardly any gradual transitions between the phase of full-time worker and that of a pensioner, where paid work is generally not allowed. According to him, the legal exceptions to the compatibility of pension and paid work (such as partial, active and flexible retirement and self-employment with an income cap) are “full of barriers and dysfunctions that make them ineffective”. Hence the small number of retirees who do so.
“It goes directly, without a transition, from paid work to retirement pension and from wage earners to pensioners with a maximum amount, with hardly any alternatives. In other words, as a general rule, the worker moves from full-time to zero hours,” the report said, denouncing that “this double wall causes significant economic harm to the worker.”
For this reason, these economists propose some improvements to current legislation that would help broaden the use of existing mechanisms to make work compatible with retirement, as it also warns that making it easier for workers who want to be so productive outside the legal limits. age” is the “only way to deal with the strong aging process of the Spanish population”. Specifically, they advocate regulating partial retirement agreements with incentives, facilitating active or flexible retirement and ending the capping of extra income That is to say, they are betting with these changes that pensions will be compatible with any type of work and without any income restrictions.
But in addition, a more ambitious reform proposal is presented to generalize a pension that is fully compatible with paid work. To do this, they believe that in order to make it easier for companies to hire older workers, it is necessary to make changes to Spanish labor law and create a new employment contract that would make it “fully compatible” with the collection of a pension, with specific rules that, without discriminating according to age, take into account that the pensioner is covered by government revenue. In addition, once full compatibility between the receipt of pensions and salary has been established, the rules of the pension system should be changed so that exit from the labor market is as flexible as possible.
On the one hand, account must be taken of the difficulty or the physical difficulty of the profession and the health status of the employee. On the other hand, they believe it should be made easier for employees not to go from work to retirement overnight, but through a gradual reduction of the working day to full retirement.
“In short, a reform proposal is presented for a flexible and compatible pension that will be essential in light of the changes our labor market will undergo due to the aging of the population and the worrying increase in the dependency rate.” Fedea concludes.
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.
