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Spain is making it easier for people who have already retired to return to work while continuing to receive part of their pension, with new rules coming into force this Friday August 28.

 

The changes are part of a big push to encourage older people to remain economically active at a time when Spain’s working-age population is expected to shrink. The new system also opens flexible retirement to certain self-employed workers for the first time.

 

So what does it actually mean for pensioners?

 

Under the new rules, someone who has already started receiving their pension can return to a part-time job while continuing to receive part of their pension. The permitted working hours will range from 33% to 80% of a comparable full-time job.

 

The amount of pension they receive will normally be reduced according to the amount they work. However, there’s an additional incentive for people who wait at least six months after retiring before returning to work.

 

Someone working between 55% and 80% of a full-time job can receive an additional 25% of their pension, while those working between 33% and less than 55% can receive an additional 15%.

 

For example, someone who normally receives a €1,000 pension and returns to work on a 60% schedule would first have their pension reduced according to the hours they’re working. The new 25% incentive is then applied to the pension amount they were receiving before entering flexible retirement. The precise amount therefore depends on the individual's circumstances.

 

There’s another significant change for self-employed workers. From August 28, certain pensioners will be able to return to work as autónomos while continuing to receive 25% of their pension. However, there is an important condition. They must not have been registered as self-employed during the three years immediately before their retirement.

 

The reform also comes with an important catch that pensioners considering a return to work should understand. In most cases, the contributions made while working under flexible retirement won’t increase the pension they receive in the future. The new system is therefore mainly about allowing people to earn a wage while continuing to receive part of their existing pension.

 

There is an exception for people who took early retirement involuntarily, such as following a dismissal or collective redundancy. In those cases, the additional contribution period can be taken into account when the pension is recalculated.

 

The government hopes the changes will encourage more retirees to return to the workforce. At present, only around 3,000 people use flexible retirement, according to the government, which considers the figure far too low.

 

The timing comes as Spain faces a major demographic shift. The country is expecting a substantial increase in the number of people over 64 during the coming decades, while the working-age population is expected to fall.

 

The new rules are intended to give older people more choice about how they approach retirement, allowing some to step back into work without completely giving up their pension.

 

 

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