There is already a proposal for the pension reform that the Government of Pedro Sánchez wants to undertake. The Ministry of Social Security has provided social agents with a draft with proposals for the new legislation, which toughens voluntary and partial early retirement while rewarding delayed retirement, that is, the prolongation of working life beyond the age legal retirement. In the latter case, the Executive proposes several options to increase the pension of the interested parties, such as an increase of 4% for each year of delay, as stated in the text El Periódico has advanced and to which elDiario.es has had access.
How it affects the pension to extend the calculation to 35 years of contributions: cuts in general, improvements for the unemployed and harmful for women
In the first place, it highlights that the document presented to the unions and employers does not include one of the star issues of recent weeks: the extension of the period for calculating the pension, from the last 25 years of contributions to 35, as Vice President Nadia Calviño has confirmed that the Government is studying. The Executive wants to present this change to Brussels, as a counterpart to other measures that dismantle the 2013 Rajoy pension reform, such as the revaluation of pensions based on the CPI. The extension in the calculation period generally means a reduction in future pensions, although there are differences according to job careers and can benefit unemployed people at the end of their career.
In addition, the text also includes a highly topical topic that has “thousands” of elderly unemployed on edge, in a difficult figure to specify. The draft includes the permanent maintenance of the so-called ‘safeguard clause’ of pensions, which grants benefits in retirement to people unemployed since April 1, 2013 who have not returned to work. Approved by the Zapatero government and later limited by that of Rajoy, the clause is focused on workers who were unemployed at advanced ages and did not reengage in the labor market, so that the pension legislation prior to 2011, more advantageous.
The point is that this clause expires in a few days, on December 31, and those affected who fear that its validity will end are immersed in uncertainty, because the Government has not announced what it is going to do with this issue and there is only one week left for its extinction. Thus, CCOO and UGT yesterday urged the Executive to urgently announce the maintenance of the clause, for which it is inclined according to this draft, to give security to citizens.
4% increase for delaying the pension
Minister José Luis Escrivá has already announced that his intention is to delay the effective age at which people retire (now 64.6 years), so that it is closer to the ordinary legal age (66 years in 2021). One of the plans to do so is to further promote delayed retirement, that is, one in which those interested extend their working lives and retire beyond the legal retirement age.
The Government’s draft proposes rewarding delayed retirement with three options to choose from: increasing the pension by 4% for each year of delay (now it goes from 2% to 4% depending on the years of contributions), receiving a lump sum for each full year listed “the amount of which will be determined based on the credited listing years”, or a combination of both options.
People who voluntarily delay their retirement may also collect a pension above the maximum established in the Budgets, something that is not possible now.
Penalize more early retirement
Another way that the Government wants to apply to bring the effective retirement age closer to the legal one is to penalize voluntary early retirement. For her, Minister Escrivá raises mainly two measures. On the one hand, penalize more the early retirement of workers with higher wages and who will access the maximum pension. In this case, it proposes to apply the reducing coefficient to penalize the early withdrawal to the amount of the pension (instead of applying it to the regulatory base), which will mean a greater cut in the amounts to be received.
This is so because the maximum contribution base is well above the maximum pension, so that when the reduction coefficients are applied on the base, they sometimes hardly affect the final amount received by high-paid pensioners. Escrivá defends this change so that the penalties are more equitable, but social agents warn that in reality these workers are already being penalized by contributing wages much higher than the pension they are going to receive and that is capped.
The other way that the Government proposes to toughen up and discourage early retirement is to penalize more (with higher reducing coefficients) the first and last years in which early retirement is eligible. This greater penalty of extremes seeks, in the first case, that people do not retire as soon as they can and are collecting the pension for so many years, and in the second, that it compensates them to endure a few more months at the legal retirement age.