Early Retirement- What Requirements Do I Have to Meet It?

Early retirement is one that can be sought prior to attaining the minimum retirement age, which rises gradually year after year. The revised prerequisites for obtaining retirement went into effect on March 16, 2013, as announced in the Official State Gazette. These stipulate that the minimum retirement age will progressively rise until 2027, with the age for early retirement set at 65 and the usual retirement age set at 67.

In brief, this new legislation attempts to guarantee that employees stay in the job market for longer periods of time in response to the gradual growth in population life expectancy. As a result, early retirement becomes a less valuable resource.

We have included all of the essential information, qualifications, and unique instances to qualify for early retirement in this guide.

General prerequisites for requesting early retirement!

In general, the following are the conditions to consider in order to be eligible for early retirement:

1. Proof of at least 30 years of service

Two of the 30 years must have been spent contributing in the final 15 years before retirement. Moreover, bonuses will not be given for actions that are hazardous to one's health or for disabilities that are equal to or more than 45 percent or 65 percent.

2. Special cases

There are certain circumstances that are out of the ordinary yet can benefit from early retirement, however they should be scrutinised more closely. Part-time employees, for example, have a more complicated estimate of years of contributions. All information is available on the Ministry of Labor and Social Security's website, and all exceptions are listed on this page.

Types of early retirement

It is important to remember that the economic advantage of early retirement is less than that of retiring at the legal or standard age. In layman's words, reduction coefficients are applied to the amount of the pension based on the features of each instance.

There are different sorts of early retirement, but in general, we may divide them into voluntary and obligatory. The features of these two forms of early retirement are explained in full below.

a. Voluntary early retirement

Voluntary early retirement occurs when a worker decides to stop his or her working life before reaching the legal retirement age. You must be at least two years younger than the legal retirement age and have contributed for at least 35 years to be eligible. Although it was previously possible to apply for special retirement at the age of 64, or one year before retirement age, the 2013 policy is no longer in effect. 

In this regard, the retirement table is an extremely important resource for linking various sorts of data relevant to this topic. Furthermore, it enables you to draw inferences and generate economic projections depending on the sort of retirement to which you will have access.

b. Forced early retirement

Forced early retirement happens for circumstances beyond the worker's control and is typically the result of a corporate reorganisation. In this situation, it is also not essential to have attained the legal retirement age, therefore you can file for compulsory retirement at the age of 61. The following conditions must be completed in order to gain access to it:

• be at least four years younger than the legal retirement age
• Having put in a minimum of 33 years
• having been registered with the employment offices for at least six months previous to applying

c. Early retirement due to illness

Although this is not an early retirement option in and of itself, we put it in this category since it functions as one. When a serious or persistent sickness prohibits you from performing your job duties, you may be eligible for early retirement. You can apply for an early pension if you satisfy the conditions set out in Royal Decrees 1851/2009 and 1539/2003.

It is critical not to conflate early retirement due to sickness with permanent disability, as these are two distinct benefits that are incompatible. Remember that early retirement due to sickness is income obtained for having a condition that renders you unable to work after you reach the legal retirement age. 

Absolute permanent disability (often referred to as "disability retirement"), on the other hand, can be claimed prior to attaining retirement age. Once you reach the legal age, you must pick between one benefit and another since they are incompatible. To do this, it is best to research the benefits and drawbacks of each options and then choose the best fit for your needs.

Reduction coefficients in early retirement

If the prerequisites for early retirement are satisfied, there is another thing to consider before seeking it: it includes a decrease in the amount of the pension, which is referred to as decreasing coefficients. The proportion of reduction increases as the worker's retirement age lowers. In other words, the earlier you retire, the lesser your pension will be.

The reduction coefficients are used for a variety of reasons, thus it is best to research the specifics of each instance. However, in general, these decrease percentages vary based on a number of factors, including:

• the number of years of Social Security contributions
• the number of quarters before the worker's attainment of the legally mandated retirement age
• the sort of early retirement desired: voluntary or mandatory
• What kind of government pension do you get?

As previously stated, early retirement entails a reduction in the benefit gained when retiring at the legal age. To calculate early retirement, among other things, the years of contributions and the accompanying reduction coefficient must be considered.

Early retirement: specific cases

The features that emerge while gaining access to early retirement are highly specific. As a result, it is worthwhile to examine some reoccurring occurrences depending on the worker's group, age, or working history.

1. The freelancers

Early retirement for self-employed people can be both voluntary and mandatory. When seeking this sort of measure, it is required to assess the relevant conditions (age of the worker, years of contributions, etc.).

2. State officials and workers

At this juncture, two categories of government officials must be distinguished: those of the Passive Class Regime and those of the General Social Security Regime. Both had distinctions in terms of benefits and retirement age, but on January 1, 2011, changes went into effect that brought the Passive Classes' circumstances in line with the rest of the workforce.

In general, those State employees who started their jobs in 2011 can apply for retirement as civil servants ahead of time, but their terms will be the same as those of the other categories. However, as previously said, before seeking any form of retirement, we urge thoroughly reviewing each situation. 

In fact, in the case of State workers, a sector in which there is a great variety of professionals, from teaching staff to security forces (early retirement is also possible for local and national police, etc.), it is convenient to analyze every detail. For example, having served in the military has an impact on retirement, which might go unreported if this option is not acknowledged. 

As a result, knowing all of the information might be advantageous in terms of the ultimate pension to be paid.

3. Private savings and early retirement

As previously stated, early retirement necessitates a cut in the public pension. Private savings, on the other hand, are the most effective approach to counteract this decline. There are several alternatives, but the most frequent is a pension plan, which allows you to save money to supplement your pension after you meet the minimum retirement age. 

This benefit allows you to get a decent monthly pension without having to wait until you reach the official retirement age.