Spain’s Retirement and Paternity Leave Laws Shift in 2021
Spain has new limits on the reduction of the taxable amount for contributions to its pension system. This includes qualified pension plans and company social benefit plans (Plan de Previsión Social Empresarial).
Effective January 1, 2021, the most the taxable amount can be reduced by is 30% of an employee’s annual income up to €2,000 annually. This limit can be increased by €8,000, provided the increase comes from employer contributions.
In Spain, the general legal retirement age is 67, which will be in force in 2027. Currently, the pension age is in a transition period, where people can apply to access 100% of their pension each year according to age and contribution requirements.
Consequently, by 2021 it is necessary to have turned 66 to qualify for retirement if you have quoted less than 37 years and three months. For their part, workers 37 years and three months or older may continue to retire at age 65.
The maximum annual amount a person can receive from Spain’s social security system is now €37,904.86 (up 0.9%, according to the consumer price index (CPI) scheduled for next year).
Employees can retire up to two years before reaching the legal age, but they must prove they have worked for at least 35 years, 15 of them before the retirement date. Therefore, in 2021, the early retirement age is 64 for contribution careers of less than 37.3 years quoted. However, those who accumulate 37.3 years or more of social contributions may also apply at 63 years of age.
The reducing coefficients applied in this type of early retirement remain immovable.
Paternity leave in Spain is now 16 weeks and includes childbirth or adoption and caring for a child under 12-months-old. Maternity and paternity permits shall be equal and non-transferable for both parents.
This article about Spain’s new retirement and paternity leave laws is provided by SARE, Asinta’s employee benefits consulting Partner in Spain.