Pension reform: Key changes introduced by Royal Decree-law 11/2024

Key changes to retirement modalities after Royal Decree-law 11/2024

This reform brings a comprehensive overhaul of the pension system, affecting the following modalities:

1. Active retirement: greater flexibility and work compatibility

• Removal of the 100% pension requirement: entitlement to a contributory pension will suffice.

• Full work compatibility: applies to all types of employment, whether salaried or self-employed, part-time or full-time.

• Pension amount scaled according to deferral period: 45% (1 year), up to 100% (from 5 years onwards).

• Self-employed with employees: will receive 75% from the first year of deferral.

• Incentives can be accumulated: active retirement is now compatible with delayed retirement bonuses.

2. Partial retirement: broader access and stricter replacement contract conditions

• Early access with replacement contract: now possible up to 3 years before the legal retirement age.

• Extended working time reduction: up to 75% (previously 50%).

• Stricter replacement contracts: must be permanent and full-time, and last at least 2 years.

• Extension to cooperative members: now treated as employees.

3. Delayed retirement supplement: stronger incentive to continue working

• Now compatible with active retirement.

• Option to accumulate the annual deferral bonus, increasing the economic benefit of postponing retirement.

4. Discontinuous permanent workers: addressing previous inequality

• Reintroduction of the 1.5 coefficient for calculating contribution periods, previously eliminated in 2023.

• Adjustment of the regulatory base calculation to better reflect the employment patterns of discontinuous workers.

5. Transitory regime for the manufacturing sector

• Extension to 2029 of the special partial retirement regime for manufacturing workers.

• Gradual increase in contribution base of the partially retired worker, reaching 80% in 2029.

Legal amendments

• General Social Security Law (LGSS): articles 213, 214 and 215.

• Workers’ Statute: articles 12.6 to 12.8, regarding the replacement contract.

State Passive Classes Act: aligned with the new active retirement rules.

Royal Decree-law 11/2024 represents a significant shift towards a more flexible labour market and an ageing workforce. At Valero Tax Legal, we support our clients in understanding how these changes may affect their retirement plans and professional decisions.