New retirement proposal: work and collect a pension with a contract without dismissal costs

Spain faces a process of population aging that is more intense than that of other neighboring countries, which have gone through this situation before.

In the Spanish case, furthermore, it is a more serious demographic problem due to the higher life expectancy of its citizens and the lower fertility rate of women of childbearing age.

This circumstance threatens the sustainability of the pension system, something that would be mitigated if an effective extension of the working life of those close to retirement were achieved to generate more wealth.

This reflection is the basis of the work

Aging and Retirement

prepared by Fedea researchers José Ignacio Conde-Ruiz and Sergi Jiménez-Martín for the project

Food for thought: contributions to the debate on public policies,

in which these economists propose “turning it around as "to put a sock on labor and pension legislation with the aim of stopping wasting all the senior talent that wants to continue working."

Thus, the overall idea for this reform is that, in general, the law completely allows you to collect a retirement pension and continue working at the same time.

To this end, this proposal includes, among other things, the creation of a new contract without severance pay costs, for those who want to remain active full or part-time in the same company or another, after reaching the agreed age of employment. retirement and having accessed a pension.

In Conde-Ruiz's opinion, this dismissal measure would not be “discrimination” and would be “fit” because the person already has their safety net consolidated with the Social Security system pension.

In addition, it would make companies “not be afraid” of senior employees remaining on staff and accumulating seniority.

These economists consider that the current flexible retirement modalities—active retirement, partial/flexible retirement (before/after the ordinary retirement age) and retirement compatible with self-employment—are “excessively rigid and by eliminating these rigidities there is room for that everyone can improve: workers, companies and the State,” the director of Fedea, Ángel de la Fuente, explained this Monday during the presentation of this report.

According to the figures from this research, there is evidence that suggests that in Spain the work capacity of employed people aged 60 to 69 has increased by 59% in the last three decades compared to equivalent mortality rates.

“This means that older workers are increasingly better trained, have more work capacity and have better jobs in general,” said Jiménez-Martín.

For this reason, the authors of the work point to an urgent need to carry out a comprehensive and radical reform of the moment in which one transitions from being active to retirement, "so that one does not go from working 40 hours a week to 0 overnight,” states the document presented.

At the same time, they believe the retirement process “should not be homogeneous for all workers and should take into account how hard or physically demanding the profession is and the health status of the worker.”

But, above all, they indicate that this reform should be based on an idea: “once the normal retirement age is reached, the system must allow, if the worker so wishes, full compatibility between the receipt of the pension and the salary.” .

Unify the flexible retirement age from 61 or 63 years

However, they believe that, in terms of age, all retirement modalities should be unified into one from the first possible age of early retirement (61 or 63).

From there, the new active retirement system should make the pension compatible with work at all ages.

Furthermore, they believe that the amount of the pension should not be penalized “after the normal retirement age”, as currently occurs in partial retirement;

but they do provide for a penalty depending on the salary level, health or hardship of employment, before the normal retirement age.

Furthermore, they point out that “to avoid any form of discrimination, the new active retirement should not exclude any worker, as long as they have a minimum number of years of contributions and the right to some form of retirement.

Thus, they propose eliminating the current obligation to spend a year in delayed retirement (or inactivity) to access active retirement at all ages.

Introduce changes to partial retirement so that the worker can continue in the same job part-time with any percentage of the working day (now it is priced between a minimum of 25% and a maximum of 50%).

Regarding the impact of this reform on the worker's contributions and, therefore, on the social contributions payments made by companies, these researchers propose that for both active and delayed retirement, the current system could be maintained that allows Once the contributory career is completed (in terms of age and required contributions), the subsequent job ceases to contribute or at most, in the case of active retirement, contributes at a reduced rate (solidarity quota).

Although, they add that, in their opinion, although they could choose to maintain said system, if access to work were made fully flexible after starting to collect the pension, "as fair as possible with all workers (pensioners or not), that compete for the same set of jobs, is that the quotation be made at the same rate for everyone.”

This last option would be more expensive for companies, but workers would continue to contribute on the general scale (as in the United States) and their pension would be recalculated once the delay or the period of compatibility between pension and salary has ended, rewarding time and/or or additional contributions contributed to the system during the career extension period.

Follow all the information on

Economy

and

Business

on

Facebook

and

X

, or in our

weekly newsletter

Subscribe to continue reading

Read without limits

Keep reading

I am already a subscriber

_