Can a retiree work and receive their pension?

Find out what options are available for retirees who want to receive their pension while still working.
Although working and receiving a retirement pension may seem incompatible, this is not always the case. In fact, there are options that allow retired people to continue working. As life expectancy continues to rise, there are more and more measures that work to ensure the viability of the pension system. Read on to find out how a retired person can work while receiving a pension.
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Exceptions to the rule

More and more working people are combining their pension, or part of it, with self-employed or employed work. For example, these could be people with a reduced pension who need extra income to maintain their standard of living. Or business owners who want to continue to maintain their business after retirement age. Or, increasingly, workers who want to continue to feel active and contribute their little part to society with their work. This option benefits Social Security to a certain extent, so the legislation provides for a series of circumstances in which retired people can continue to work while they receive a part or all of their pension.

To take advantage of this situation, individuals must meet a series of requirements that vary depending on the work activity, income, and situation of the pensioner. Read on for further information.

Active retirement

Once the retirement pension has been established, this modality allows the individual to receive a pension while working as an employee or a self-employed worker without a limit on hours. Contributions will only be made for work-related contingencies and temporary disability, as well as 8% for joint liability; 6% will be paid by the employer and 2% by the worker. In order to be eligible for this modality, you must have retired at the ordinary age, and you must have made contributions in an amount representing 100% of the regulatory base.

The general rule is that the activity is carried out while receiving 50% of the retirement pension. Contributions made during active retirement do not entitle the pensioner to a recalculated pension, which will be received in full once final retirement is reached. However, self-employed workers with at least one employee will be able to receive 100% of their pension during active retirement.

Partial retirement

Any retirement initiated after an individual has reached 60 years of age while continuing part-time employment is considered as partial. This employment will be based on part-time employment contract, irrespective of whether or not it is linked with a relief contract entered into with an unemployed worker or a worker that has agreed a fixed-term contract with a company. The reduction in working hours can be between 25% and 85%, depending on the partial retirement modality. When you retire earlier than the ordinary retirement age, you must enter into a relief contract.

Flexible retirement

Flexible retirement allows retirees to rejoin working life as employees, provided that their working day is between 50% and 75% of what would be the usual working day for the job they perform. Before starting the activity, the pensioner must notify the Social Security Institute of this circumstance. The latter will then reduce the pension in proportion to the percentage of the working day the pensioner will perform. Working people who take advantage of this measure will continue to pay contributions until they decide to retire definitively, at which point they will receive their full pension. Furthermore, the pension will be recalculated taking into account the contributions made during this flexible retirement period.
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Pensioners who are self-employed with an income below the national minimum wage

The General Law on Social Security also makes it possible to receive 100% of the retirement pension with self-employed work, provided that the annual income from this work does not exceed the amount of the minimum wage established for that year. These pensioners are not obliged to make Social Security contributions, although they do have to comply with the tax obligations corresponding to self-employed workers.

Although not all workers who fall under one of the aforementioned cases do so for purely financial reasons, it is true that having extra income once they reach retirement age allows more freedom when making a decision of this type. One of the ways to guarantee this additional income is by investing in a retirement plan during working life.

Retirement plans have significant tax advantages and are flexibility in the amount and frequency of contributions, making them suitable for all types of income and savings profiles. At BBVA, we offer different pension plans that allow you to plan your retirement based on your age and your savings goals. Visit or one of our branches to learn about them and how we can help you take on retirement with security.

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