Spanish Government looking at incentives for delaying retirement

THE Spanish Government is looking at providing incentives for those who carry on working after the age of 65 while taking steps to stop high earners from taking early retirement.

In his appearance on Wednesday before the Toledo Pact parliamentary commission, Inclusion and Social Security minister Jose Luis Escriva said his department’s intention is to encourage people to delay their retirement through a redesign of the extra payments for those who extend their working life and with a different structure for compatibility between salary income and a pension.

According to the minister, “Spain is a country which gives very little credit for delaying retirement.”

He said his department is therefore carrying out a study on the labour market for people who are on the verge of retiring, evaluating the incentives which do exist and looking at why they are not used with a view to “designing a better constructed system.”

At the same time, the ministry plans to change Social Security legislation to prevent people in high income brackets from being able to take voluntary retirement before the age of 65 without hardly affecting their future pension allowance.

He said the aim is to make the necessary changes to the rules so contributors on maximum contribution rates would be penalised in terms of their future pensions by up to 16 per cent less, as are other workers, if they opt to bring forward their retirement.

Escriva explained that this has not happened up until now due to an “anomaly” in the system.

The minister also revealed that the Social Security deficit will end the year at the equivalent of two per cent of GDP due what he described as the “transitory impact” of the Covid-19 pandemic on the system’s accounts.