The new flexible retirement is now a reality in Spain. At the end of May, the Government approved the reform of this option, as well as the delayed withdrawal, but it has not been until now that both have come into force. Starting this Friday, retirees who want to return to work as self-employed workers while maintaining part of their pension will be able to do so, a formula that until now was only possible for returning to salaried work. And those who have delayed their retirement for several years will see increased financial improvements from this decision. With these changes, the Executive completes a series of transformations aimed at encouraging workers to extend their working life and delay the moment of retirement.
All the changes in the Social Security regulations, approved in several phases, have had two main objectives: on the one hand, to increase the income of the system, increasing contributions; and, on the other, encourage workers to remain active after reaching retirement age. Both issues seek, ultimately, to strengthen the sustainability of pensions in the face of the massive arrival, starting this decade, of retirees from the baby boom generation, something that will test the financial seams of the system.
The first phases of the reform touched up, above all, the modalities of early, partial and active retirement. While the new developments that now come into force fundamentally affect flexible retirement, which is one in which an already retired person decides to return to work and maintain part of the pension; as well as delayed retirement, which occurs when someone reaches retirement age but decides to remain active and delay collecting the pension.
The new flexible retirement
The most significant change in flexible retirement is that, until now, it could only be enjoyed by those who returned to part-time salaried employment, making it compatible with part of the pension. Starting this Friday, retired people who return to carry out an activity, but as self-employed, will also be able to combine income from work with a pension. However, they must not have been registered in the Self-Employed Regime (RETA) in the three years prior to their retirement. The percentage of pension that those who choose to combine with a self-employed activity will receive will be 25% of the amount of the retirement benefit they were receiving.
The percentages of working hours and pensions that those who, once retired, decide to return to work partially, but as employees, will also experience changes. In this modality the pension is reduced in inverse proportion to the working day (same as before), but the novelty is that the working day compatible with the pension is extended and must be between 33% and 80% of the ordinary working day (until now it was between 25 and 75%).
In addition, incentives are established in the form of pension improvements if the retiree decides to re-enter the employed labor market and make the pension and salary compatible once six or more months have passed since retirement. In that case, the increase in the compatible pension will be 25%, if the part-time work to which the employee returns is between 55% and 80% of the ordinary working day; and 15%, if said day is between 33% and 54%.
Changes to delayed withdrawal
Regarding delayed retirement, the latest reform focuses on improving the so-called delay supplement, which is the economic incentive received by those who continue working after reaching retirement age without making it compatible with the pension. Until now, people who chose this modality to prolong their working life could choose between improving their pension percentage-wise (4% more for each full year of delay); receive a lump sum payment; or a mixed formula that mixed the two previous formulas. In this last mixed modality of the delay supplement (which can be accessed if two years have passed since the retirement age and effective withdrawal have been reached), the complete semesters begin to be computed from this Friday. By not doing it for full years as before, the incentive improves.
Furthermore, in very long delayed careers, which are those that last nine or more years after reaching retirement age, who opt for the mixed formula, a fixed scheme is established: five years are remunerated through a single payment and the rest through a percentage increase in the pension (4% more of the pension for each year, 2% for every six months).
In Europe they are more compatible
With all these changes, the Government intends that every day there will be more workers who decide to delay the moment of their full retirement, since the numbers of those who choose to do so are still residual in Spain, although they have been rising in recent years. In the pension payroll paid by Social Security last July, it was reflected that 79,475 people made salary and pension compatible mainly through the different existing active and flexible retirement options. This means that cases have increased by 9.5% compared to a year before. But it represents little weight on the system, which does not reach 1% of the ten million people who receive a pension in Spain.
Despite this growth, the Spanish economy continues to be well below the European average in these parameters. According to the latest comparable figures from Eurostat, 4.9% of people who began to receive a retirement pension in Spain continued working after doing so, compared to 13% for the EU27 average.
Progress and obstacles that persist
With the transformations that are now culminating, it is expected that in the coming years the compatibility situations between work and pension will increase, as well as the total delays in retirements. The Organization for Economic Cooperation and Development (OECD) indicated at the end of last year in its Economic Study of Spain 2025 that “all the reforms of the pension system carried out by Spain have meant progress towards greater flexibility in retirement.” But he added that “obstacles still remain that limit the ability and willingness of older workers to remain in employment.”
In addition, the organization's economists evaluated the latest changes on the compatibility of active and partial retirement and warned that "despite them, administrative complexity and poor knowledge of existing rights can limit the effectiveness of system changes." The agency also warned that “inertia in worker behavior and a lack of information could continue to prevent many older employees from taking advantage of the new options available.”
A very similar analysis is the one that economists Nacho Conde-Ruiz and Jesús Lahera have just done for the Santalucía Institute. In a document where they evaluate all the legal reforms aimed at collecting retirement benefits and salaries at the same time, they warn that numerous failures persist. “The coexistence of three schemes – active, partial and flexible – with different logics in terms of contribution, amount and eligibility, generates horizontal inequality and institutional confusion,” they point out.
Without a common framework that establishes uniform principles, both economists add, “the entire system runs the risk of fragmenting into overlapping regimes of little real use.” Consequently, Conde-Ruiz and Lahera propose creating a comprehensive model that unifies access, calculation and contribution criteria “under common principles of proportionality, tax neutrality and legal certainty.”
For Octavio Granado, who held the position of Secretary of State for Social Security with four different ministers (all from the PSOE), he believes that the reforms carried out by the current Executive "seem to be going in the right direction." But when determining whether they are sufficient, the expert considers that new adaptations will always be necessary. “Although it is evident that in many occupations a culture of delayed retirement has been established that did not exist a few years ago, in others it still does not,” he concludes. And he adds the idea that it would be advisable to make a “sociological balance” to determine in which occupations it would be necessary to consolidate a more delayed retirement, but with gradual reductions in working hours.
