Partial retirement: what it is and what the requirements are

We'll explain how this form of employment works, allowing you to work part-time and receive part of the retirement pension at the same time

A partial retirement is a fairly special social security coverage scheme that can certainly offer great advantages to those people who are eligible for it. It's special because it involves retiring, at the minimum age of 60, while at the same engaged in a part-time employment contract. There is also partial retirement without a relief contract, but the requirements for taking this form of partial retirement more stringent.

This way, the beneficiary is paid part of their retirement pension while at the same receiving a paycheck for their job activity.

As we have mentioned, it is possible for a person to receive a partial retirement pension whilst still working part-time at their usual employer. Not only that, but they can also continue to receive an income from any other part-time occupation they used to perform before retiring, provided the working hours are not increased. Other Social Security benefits can also be received simultaneously, such as a widowhood pension or an unemployment allowance.

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Requirements to apply for partial retirement

Without a relief contract

The minimum age required is the normal retirement age that is applicable in each case (actual age, without applying any coefficients that lower the retirement age). The contract may be for full-time or part-time work.

The workday will be shortened by a minimum of 25% and a maximum of 50%, or by 75% for those to whom the fourth transitional provision, Section 5, of the Social Security Law applies.

A minimum pay-in period of 15 years is required. At least 2 of them should be within the 15-year period immediately prior to the right to partial retirement being triggered, and no minimum length of service in the company is required.

With a relief contract

An applicant for partial retirement with a relief contract must have a full-time contract and have paid into social security for at least 33 years. To calculate the contribution period, the proportional part of any extra payments will not be taken into account, but the period of compulsory military service or of any replacement social benefit – where applicable – will be taken into account up to a maximum of one-year. If the person in question has a disability of at least 33%, the compulsory contribution period to apply for partial retirement is reduced to 25 years.

In addition to the contribution period, the applicable must have spent the last 6 years of their working life at the same company as that which will grant them partial retirement. The applicant's length of service at their previous company may count towards this minimum period in two cases:

  • If the job change was due to a business succession, as per the terms stipulated in Article 44 of the Workers' Statute.
  • If the two companies are different but belong to the same corporate group.

The last requirement the applicant for partial retirement must satisfy is a minimum age. In this regard, we must differentiate between employees who are members of a mutual benefit society and those who are not:

  • If they are members of a mutual society: can apply for partial retirement at the age of 60.
  • For those who are not members of a mutual benefit society, the age requirement applies gradually from 2013 until 2027, depending on the periods during which contributions have been paid. Whereas in 2013 it was sufficient to be 61 years and one month old and to have paid social security contributions for a period of 33 years and 3 months, in order to take partial retirement in 2027 it will be necessary to be 63 years old and to have paid contributions for 36 years and 6 months. In 2017, you must be 61 years and have paid social security contributions for 34 years and 3 months in order to qualify for partial retirement.

Characteristics of the employment contract for partial retirement

The work contract that is entered into once the worker's partial retirement is approved, if the beneficiary is below the normal retirement age, must be signed at the same time as a relief contract. This contract must also be signed in accordance with the official format and must identify the worker that is taking partial retirement as well as the new relief worker who will fill in for their reduced working hours; this is to officially establish the link between the two employees.

When specifying the workday duration, the reduction in work hours with respect to those worked by the employee before the partial retirement may range from 25% to 50%. It is also possible to apply a reduction of up to 75%, provided that the relief contract is a full-time, permanent contract.

Finally, as regards the Social Security payments of the partial retiree, as of 2014 this has increased gradually by 5% with respect to the 50% of the payments specified for 2013, the goal being to reach 100% of the contribution base that would correspond to a full-time employee by 2023. In 2017, a person who has taken partial retirement pays social security contributions on 70% of their contribution base.

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Amount you receive from the Social Security Institute

The money you receive from the Social Security Institute is known as the partial retirement pension; it is the result of applying the percentage of the beneficiary's reduction in working hours to the amount of the total retirement pension they would be entitled to based on the number of years of contributions they can prove.

However, with this type of financial benefit, there are two aspects to take into account when calculating the amount of money to be received each month:

  • The amount of the final pension may not be less than the amount that would result from applying the percentage of the reduction in working hours to the amount of the minimum retirement pension in force for people over 65 years of age at the time of the calculation.
  • No age-based coefficients will be applied when determining the percentage applicable to the regulatory base for the partial retirement pension.

On the other hand, if, after establishing the amount of the partial retirement pension, the beneficiary reduces their working hours even more, then the amount of the pension will change and the new reduction percentage will be applied to the amount already recognized.

If the pension beneficiary is working multiple jobs, the corresponding regulatory base will be calculated by only taking into account the contribution bases for the work done until that point and that is the subject of the workday reduction.

The partial retiree will have the status of pensioner in terms of what healthcare benefits they are eligible for and can receive, both medical and pharmaceutical, and social service benefits. Among other things, this will allow them to apply to withdraw a pension plan due to retirement, as retirement will be considered to have occurred.

Fill in any deficiencies you may have now with BBVA

Partial retirement may be very attractive for those who are approaching the ordinary retirement age and who want to wind down to their future inactive phase gradually. However, there is always the question of how to maintain one's lifestyle with the retirement pension provided by Social Security.

As a result, BBVA offers a wide array of pension plans based on the age and investing profile of the individual. Visit bbva.es and learn more about how a BBVA pension plan can be the best tool for allowing you to live worry-free and without having to adjust your budget when you reach retirement age.

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