Calculation basis: What it is

We'll explain what this crucial factor for knowing how much Social Security benefit you are entitled to is and how it works

If you're in an accident that temporarily or permanently prevents you from working, or when you reach retirement age, everyone who has worked and contributed to Social Security for the minimum length of time required in each case is entitled to receive a wage by way of a pension. However, not all workers receive the same economic compensation; instead, this depends on how much have paid into the system previously.

But what is exactly the calculation basis? It's a scale that is used to calculate the benefits that every worker is entitled to receive from Social Security. It is determined based on the contribution basis of the payee during a specific period of time, and the amount of the pension is a percentage of this calculation basis.

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The contribution basis

Before going into details on what the calculation basis is, it's important to understand the concept of contribution basis. This term is contained in Article 147 of the Social Security Law and, broadly speaking, can be defined as someone's gross monthly salary, whether for a salaried worker or a freelancer. This monthly amount is used as a basis to calculate the fees that each worker must contribute to social security in order to benefit from its services.

Why is important understand the concept of contribution basis? For one very simple reason: determining the calculation basis is derived from and directly related to the worker's contribution bases. The calculation basis is an average of specific contribution bases. Therefore, a higher contribution basis equates to a higher calculation basis (and greater benefits received). Determining the calculation basis depends on the reason for it being calculated. The regulations differ for retirement pensions, disability pensions, and unemployment benefits.

How is the calculation basis determined for each employment situation?

As a general rule, and as previously noted, the calculation basis is calculated by dividing the amount of the contribution basis of the worker in the month preceding the benefit by the number of days that the contribution refers to. For workers with a monthly salary, the amount is divided by 30 days; for workers with daily wages, the amount will be divided by 28, 29, 30 or 31 days, depending on the corresponding month.

Although these are the parameters that are normally used, there are different ways to determine the calculation basis depending on the status at the time when a financial benefit is received:

  • Workers with multiple jobs: the contribution bases of all the companies from which the worker receives a salary are calculated while applying the current maximum contribution limit.
  • Part-time workers: the sum of the accredited part-time contribution bases is divided, with a maximum of three months prior to the disability, by the number of calendar days in that contribution period.
    • If the benefit is paid for directly by the managing or collaborating entity due to termination of the contract, the amount of the benefit will be the same as the corresponding unemployment allowance.
  • Workers with training and apprenticeship contracts, or trainee research staff contracts:
    • For training and apprenticeship contracts, the calculation basis is the minimum contribution basis under the General Social Security System.
    • For trainee research staff contracts, the calculation basis is the minimum basis corresponding to group 1 of the General Social Security System.
  • Workers from the performing arts and professional bullfighting sectors: The total yearly contribution prior to the triggering event is divided by 365. If this period of time is not reached, the daily average of the accredited contribution period is calculated.
  • Workers included in the special system for salaried farm workers: the amount of the calculation basis cannot be higher than the monthly average of the contribution basis that corresponds to the days worked during the 12 previous months before the medical leave.
  • Workers included in the special system for domestic employees: the contribution basis corresponding to the previous month prior to the leave is divided by 30.

Calculation basis in the event of temporary disability or unemployment

In this case, the base figure is calculated by applying the general rule: the contribution basis is divided by the number of days of the contribution period (28, 29, 30 or 31, as appropriate). However, it is important to remember that 100% of the resulting amount is not paid, but instead, social security stipulates the percentage that applies to the following cases:

  • Ordinary illness or non work-related injury:
    • 60% of the corresponding calculation basis from the 4th to the 20th of the month (both inclusive).
    • 75% of the corresponding calculation basis from the 21st onward.
  • Workplace accident or occupational disease: 75% of the calculation basis from the first day that the person has the right to payment.
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Calculation basis in the event of retirement

To calculate the financial benefit that each worker is entitled to, the first thing to consider is the Social Security contribution bases in the years prior to retirement. After this, the calculation basis is determined. In 2017, it was calculated by dividing the sum of the contribution bases in the 240 months immediately prior to the month before the triggering event by 280. From 2022, the quotient will be of 300 divided by 350, as the last 25 years will be calculated.

Finally, certain parameters are applied to the resulting calculation basis depending on the total years contributed by the worker:

15 years of contributions: 50% calculation basis.

35 years and 6 months of contributions: 100% calculation basis.

• From 2027, at least 37 years of contributions will be required to reach 100% of the calculation basis.

Understanding the calculation basis and knowing how to calculate it is essential to do the numbers and start to plan our future based on the economic benefits that apply to us. If you're worried that, come retirement time, you won't have contributed enough, and you're afraid that your purchasing power will be diminished, you can resort to a BBVA Pension Plan.

By visiting bbva.es you can find out about the pension plan that is best suited to you, based on your age range and your profile as an investor. Very shortly, you will be able to request an instrument with BBVA's guarantee to ensure your retirement pension. In addition, the law allows funds to be drawn from a pension plan due to serious disability, therefore, a BBVA Pension Plan will also cover you in such circumstances.

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