Retirement and pensions; this is the law

We will explain everything you need to know about the latest changes that have been introduced to the pension system.

Over the past number of decades, the sustainability of the Spanish pension system has begun facing the challenge brought on by an aging population. Other variables, such as falling salaries and rising unemployment rates, have not helped either.

In order to guarantee the system's smooth operation, a series of regulations and mechanisms have been put in place that have gradually modified the requirements associated with retirement. The pension reform articulated in Act 27/2011, which began to be implemented in 2013, has introduced parametric changes to the requirements for retiring and the method of calculating pensions. These are being implemented gradually until 2027. In this article, we go over the key aspects of retirement and pension.

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Retirement age

In 2013, as a result of the entry into force of this law, one of the mechanisms that has had the most impact on the future of current workers was initiated: the gradual increase in retirement age. In accordance with the provisions of this law, the retirement age will gradually increase annually over a transitional period that will culminate in 2027; from then on, the legal retirement age will be 67. However, workers who can prove a minimum contribution period of 38 years and 6 months will be able to access retirement at the ordinary age of 65 years.

In 2019, workers who want to enter ordinary retirement must have reached 65 years and 8 months of age. The minimum contribution period for retiring at 65 is 36 years and 9 months. Both figures will increase two to three months a year, respectively, until 2027.

Pension regulatory base

As with the retirement age, the calculation of the regulatory base — which determines the amount of the pension — has also been subject to changes. The regulatory base is calculated based on the contributions of the years prior to retirement. This variable, which was historically obtained after the last 15 years of the employee's contribution, will be gradually increased to comprise 25 years of Social Security contributions in 2022. In 2019, the regulatory base was calculated based on the contributions paid over the last 22 years.
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Accessing the full pension

Apart from the regulatory base, there is another parameter that determines the pension amount that retired workers receive: the contribution period. This variable refers to the number of years a worker has paid contributions throughout his or her working life and is applied in the form of a percentage on the corresponding regulatory base. Currently, the minimum contribution period required to receive Social Security benefits sits at 15 years, whereby 50% of the regulatory base is granted to the worker. However, the period required to receive 100% of the pension is, as with the aforementioned variables, in a phase of gradual increase. Thus, workers who retire in 2019 will be able to access the full pension provided that they have contributed for a minimum of 35 years, while, in 2027 and subsequently, a minimum contribution period of 37 years will be required.

Are you worried about the future of retirement and pensions? At BBVA, we have the solution. BBVA's pension plans are the most convenient and secure way to generate savings for retirement. If you don't know which plan is most suitable for you, don't hesitate to take a look at our pension plan simulator. This tool will help you calculate your estimated annual pension and decide which product best suits your needs. Visit or come to any of our branches and discover how to plan your retirement intelligently

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