Nowadays, many people are considering setting up their own business as self-employed professionals in order to enjoy autonomy, flexible working hours, a fulfilling career and greater opportunities for financial growth; however, in contrast to all these positive aspects, There is widespread concern: retirement for the self-employed. This raises questions such as: Are the benefits for self-employed pensioners the same as those for pensioners who were once employees? Which contribution scheme should I choose to improve my future pension if I become self-employed? What is the minimum pension? We’ll answer all these questions and much more in the following post. Keep reading and don’t let your questions go unanswered!
Who will be eligible to retire in 2024?
In this new year that has just begun, these are the two groups of salaried workers who will be eligible to retire:
- Ordinary retirement: Workers who have made Social Security contributions for fewer than 38 years can retire at the age of 66 years and six months. Those who have made contributions for 38 years or more can retire at the age of 65.
- Early retirement: Workers who have made contributions for 38 years or more can take early retirement at the age of 63. Those who have made contributions for fewer than 38 years can apply for early retirement from the age of 64 years and six months.
As for the self-employed, these are the groups who will be able to retire this year
In 2024, the retirement rules for the self-employed in Spain have undergone some significant changes. Here is a summary of the changes to the retirement conditions for this year:
- Standard retirement age: The standard retirement age has risen to 66 years and six months for self-employed workers who have made contributions to the Special Scheme for Self-Employed Workers (RETA) for fewer than 38 years. However, self-employed workers who have made contributions for 38 years or more will be able to retire from the age of 65.
- Early retirement: Self-employed workers who have made contributions for 38 years or more will be able to take early retirement from the age of 63. Meanwhile, those who have made contributions for fewer than 38 years will be able to apply for early retirement from the age of 64 years and six months.
- Deferred retirement: Self-employed workers may opt for deferred retirement, which involves continuing to work beyond the standard retirement age. The supplements for each year worked beyond the retirement age remain at 4% of the standard pension.
- Active retirement: Self-employed people can opt for active retirement between the ages of 66 and 67 years and four months, one year after reaching retirement age.
It is important to remember that these changes are part of a pension reform that provides for a gradual increase in the standard retirement age from 65 to 67 between 2016 and 2027. It is therefore essential to keep up to date with the latest regulations in order to plan for retirement properly.
Find out what requirements self-employed workers must meet to qualify for early, deferred and active retirement
There are a few exceptions regarding retirement that you should bear in mind, and these vary depending on the new regulations. Please take note of the following points!
Early retirement
- Be at least 63 years of age and have made contributions for at least 35 years.
- Provide evidence that contributions were made for at least two years during the 15 years prior to applying for early retirement.
- That the amount of the pension to be received is greater than the minimum pension to which the person concerned would be entitled upon reaching the age of 66 years and 4 months.
Deferred retirement
- To have made contributions for at least 15 years under the RETA or the General Scheme.
- Have reached the minimum age for standard retirement for the current year.
Active retirement
- At least one year must have elapsed since reaching the standard retirement age.
- To have made contributions for a sufficient number of years to be entitled to receive the 100% pension.
- Not to have benefited from any allowances or early retirement.
What will the minimum and maximum pension amounts be for the self-employed in 2024?
In the year 2024, the minimum pension for the self-employed in Spain will be set at 770.05 euros per month, whilst the The maximum pension for those who have paid contributions based on the maximum contribution base will be 3,129.40 euros per month. By comparison, For salaried workers, the minimum contributory pension for 2024 will be 521.42 euros per month, whilst the The maximum pension will be 3,175 euros a month.
It is important to note that, although the figures may appear similar, there are significant differences between the pensions of the self-employed and those of salaried workers, as the self-employed have the option to contribute on the basis of a minimum or maximum amount, which may result in lower pensions if they have chosen to make contributions based on the minimum contribution base throughout their working lives. On the other hand, salaried workers make contributions based on their salary, which may result in higher pensions if they have earned higher salaries throughout their working lives.
One of the advantages of registering as a self-employed person, is that these they can change the basis on which they wish to make contributions up to six times a year, always subject to the actual income they earn in each financial year. Therefore, although the figures for minimum and maximum pensions may appear similar, the individual circumstances of each worker – whether self-employed or an employee – can result in significant differences in their final pension entitlements. It is primarily for this reason that it is essential for every worker to understand these differences and plan accordingly for their retirement.
