One in three early retirees was unemployed

Almost 80,000 new retirees had a cut in their pension for leaving the labor market early, according to provisional data from the Ministry of Social Security for the year 2020 to which this newspaper has had access. This is the group that will be affected by the new penalty scheme that the Government intends to implement this year, as Minister José Luis Escrivá recently advanced. This means that practically 40% of new pensioners can be affected by this change in the model and that more than one in three early retirements comes from unemployment.

Despite the fact that Escrivá reiterates over and over again that most of these people who retire early, that is, before the legal age, will benefit from the reform that he raises, the truth is that the cut can amount to up to 460 euros less per month for those who earn the most if they advance their retirement two years. And this is precisely the bulk of the collective, since more than half of those 79,500 people became pensioners between the ages of 63 and 64.

It must also be said that with the new model the penalty may be less for those who retire between the 22nd and the fourth month before the legal age, although as long as they have not contributed for the maximum, since this cut will be applied on the real pension and not on the regulatory base, which means that those who contribute for the maximum will always be harmed by the new model.

But not all early retirements are the result of your own decision. Thus, 24,500 people were forced into forced retirement last year because they were expelled from the job market prematurely, many due to a collective dismissal, and were unemployed. Almost one in ten new retirees, a number that even in 2019 rose to 33,500. Another important part of voluntary early retirement also comes from unemployment: almost 9,000 in 2019 (latest data available), so the percentage of people who retire early because they are unemployed rises to 35%.

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It should be noted, however, that the number of forced early retirements has been progressively decreasing in recent years and in 2020 fell to the lowest level of the last decade, reaching for the first time below the 10% barrier, specifically to 8.5 %. It represents less than half of those registered in 2016, something that may be due to the fact that collective dismissals have fallen in this pandemic due to the implementation of the ERTEs. It has also had an influence that in 2019 the rule was changed so that those who collect the subsidy for those over 52 years old are not obliged to retire early with the consequent penalty.

The Government will compensate pensioners for the greater rise in prices

Currently, more than 535,000 retirees have a cut in their pension of up to 40% despite having had no other alternative to being unemployed and despite having long working careers.

For the moment, Escrivá has not agreed to eliminate the cut for those people who come from unemployment and have more than 40 years of contributions, as requested by the Asjubi40 and UGT association, but in the new design it plans to soften its decline since it advanced that they will apply the reduction coefficients for causes not attributable to the worker, which are lower. It does plan later to improve the treatment for longer listing careers.

No penalty

But not all early retirement carries a penalty. Last year 32,500 people who advanced their retirement, almost 30% of the total, were able to do so without a reduction in their pension. This is because there are cases that are justified, such as those discharges that come from professions whose jobs are of an exceptionally painful, toxic, dangerous or unhealthy nature, or also people with disabilities. No reducing coefficient is applied to them, as to those that come from a relief contract, that is, when one worker is replaced by another, as long as they meet certain requirements: 18,000 in 2020, for which they will also change the rules with the reform.

The funny thing is that the 40% of retirements that are early have a significantly higher pension than people who retired at ordinary age. Quite superior. In fact, they charge almost 470 euros more and close to 1,700 euros on average, despite the fact that 71% were cut for that advance.

On the contrary, the pension of the only 14,000 retirees who delayed their retirement beyond the legal age is reduced to 1,363 euros, despite the incentives they are given for this and that will be improved in the new reform, which may involve a check of up to 12,000 euros for each year of delay.

Women and the self-employed, the most penalized if the calculation period is extended

Another of the measures that Minister Escrivá plans is to extend the period for calculating pensions. And this is stated in the reform plan sent to Brussels, although it is still an issue that has not been dealt with in the social dialogue and will be left for a second phase.

If an internal government document that was leaked to the media estimated that if the period to be taken into account to calculate the benefit of new retirees is increased from 25 to 35 years, it would mean a cut of 6.3%, a study recently published by the Willis Towers Watson Pensions Observatory, in collaboration with the University of Valencia and the University of Extremadura, raises this decline to 8.6%. That is why this measure has the frontal rejection of both the unions and a large part of the parliamentary groups, including here government partners such as United We Can.

But this average cut of 8.6% would not be the same for all groups of workers, with women and the self-employed being the most affected groups. Thus, women would suffer a cut of 10.3%, compared to 7.9% of men, which means that their initial pension would decrease 30% more than that of men mainly due to the fact that they generally have shorter working careers , as this study warns. And it is that the decline for short careers rises to 15%, double that of those who have contributed more than 43 years and 8 months.

Another of the groups most affected by the lengthening of the calculation period would be the self-employed, with a drop of 10.3%, compared to the 8.6% reduction in the General Scheme. This is due to the fact that the vast majority pay for the minimum bases during the periods furthest from the retirement age and that the unlisted months compute with zero euros for this group, strongly penalizing the value of the regulatory base.


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