The effective retirement age is 65 for the first time

We retire later. for the first time Since there are consolidated records The average age of retirement in Spain is 65, according to social security data for January-June 2023. Thus, the average age of retirement and the legal age (if the contribution requirements are met) finally converge, an aspect that the government considers essential to ensure the sustainability of the pension system.

This year’s data, corresponding to the first semester, supports a trend that has been confirmed year on year since 2018. At the time, the average age of retirement was 64.2, eight-tenths lower than now. in the past six yearsSince 2012, that record has only increased by twenty. Social Security statistics began in 2005, when the average retirement age was 63.6.

The average age of retirement should not be confused with the statutory retirement age, which is set at 65 in 2023 for those who have worked for at least 37 years and nine months. If all workers retire, these two concepts will be completely identical. But this is not the case. There are many employees who retire early, causing a decline in life expectancy, and others who don’t meet contribution requirements or fall behind, pushing the average forward. According to the latest data from Social Security, through June 2023 there were 13,223 delayed retirements, 8.1% of the total, up nearly three points from previous years. They are 45% more than in the same period in 2019. Added to this is the decrease in early retirements, which today account for 36.9% of primary enrollments and in 2016 were 44.5%.

The ministry headed by José Luis Escrivá approved various incentives to encourage late retirement for workers who wish to do so. Since 2022 who voluntarily delay retirement He receives an economic supplement when he takes the step, to choose between these two options: an additional 4% for each full year of contributions after he reaches the normal age; Or a fixed amount depending on the years of subscription (the average amount is 13,100 euros, according to the Ministry). Since May 18 this year Both formulas can be combined.

Each time these incentives are on the table, Escrivá insists that with them he is not seeking an increase in the legal retirement age, but rather a better use of the available workforce. “I am not suggesting in any way the need to work until the age of 75, as some suggest, but promoting measures that contribute to changing the mentality of companies so that they do not expel workers from the labor market from the age of 55, wasting their experience and improving the incentives for late retirement so that those who wish can work after the normal retirement age.” He said in 2021And Recently approved the first stimulus to the legislature. Spain is one of the OECD countries that previously expelled its workers from the labor market: 61 for men and 60.4 for women, with data from 2021.

The average age at which they leave the labor market

in 2021

“What most enhances the sustainability of the system is bringing the effective age closer to the normal retirement age. Improving employment prospects for those over 55 and encouraging delayed retirement are two key mechanisms, without in any way considering changing the retirement age,” Escrivá insisted. And his oath indicates that those late retirement, who start on average at about 68 years oldDesigned for jobs with less physical burden. Today those over the age of 55 account for 20.7% of the workforcecompared to 10.6% 20 years ago.

Behind these policies is the pressure that the system is exposed to by increasing the number of retirees, given the retirement of a generation baby boomincreased life expectancy (83 years) and decreased birth rate (1.19 children per woman). The latest pension reformwhich increases contributions to fund this increase (from about 10 to 15 million pensions in 2050) and a higher minimum wage, requires that these incentives work.

So that the repair accounts are balancedThe government estimates a change in the behavior of more than half (55%) of future retirees who will voluntarily decide to postpone their retirement for three years, agreeing to retire at the age of 68. According to the executive, pension spending, which now accounts for 12% of GDP, will rise to about 15%.

Good economic moment and incentives

Pension experts consulted by this paper, those who favor Escrivá’s policies and detractors alike, believe that these incentives delay the real retirement age, but there are many other factors. CGT negotiator for pensions and deputy secretary general for union policy, Fernando Luján, Indicates a good moment in the labor market“I think the real retirement age increases the more you work.” In other words, Logan believes that policies that encourage assistance in delayed retirement, but are not effective if there is not a strong labor market that provides enough employment. This unionist recalls that many of the long-term unemployed end up in early retirement because the job market has pushed them out.

“The positive economic cycle we are currently experiencing may help delay the actual retirement age. José Ignacio Conde Ruiz, Professor of Fundamentals of Economic Analysis at the Complutense University of Madrid and Deputy Director of the Foundation for Applied Economics Studies (Fedea), adds that both workers, who earn higher salaries when employed, and companies, which do not need to reduce staff, are less likely to encourage retirement if all goes well.

Another major factor that explains this advance is the effective retirement age PSOE reform of 2011, in the midst of the Great Recession. This change in the pension structure raised the statutory retirement age above 65 for workers who did not contribute enough years. A journey that began in 2013 ends in 2027, with a gradual increase in the retirement age for people with irregular work jobs.

At the beginning of the reform, ten years ago, it was proven that in order to retire With 65 years and 1 month, contributions must have been made for at least 35 years and 3 months. These two variables gradually increased until this year to reach the full retirement age of 66 years and four months if the contributions were paid for less than 37 years and nine months. The end of the road is 2027, when workers who have contributed for less than 38 years and six months will not be able to retire until they are 67. The average life expectancy in good health in Spain is 66.3 years, According to the National Institute of Statistics.

Carlos Bravo, Secretary for Social Protection and Public Policies at CC OO, believes that there are several measures taken “since 1996” that increase the average age of access to retirement, beyond those mentioned. Among them are successive increases in the calculation period or restrictive changes to early retirement in 2001 or 2011. “The commitment to stimulate access to retirement through incentives and disincentives works so well,” adds Bravo, who considers it necessary to “end the massive destruction of employment 55 years ago, with a very difficult return” to develop the full potential of the reforms.

They retire later with a lower pension

Women retire later than men: at 65.4 years, and women at 64.6. However, there are more men who choose to retire late than women. Of all retirement filings through April (this data is not available until June) that they signed, 6.7% were deferred, compared to 9.1% of them. It should be noted that they face more irregular working positions because they tend to be responsible (outside of obligation) for care, so they have less margin to choose a late retirement after 65 years. This is evident when observing the age at which they receive normal retirement (66.2 women and 65.9 men) and delayed retirement (68.6 women and 67.9 men). It is another gender gap in terms of pensionsThere are 41% of male retirees earning less than 1,000 euros per month, compared to 70% of women.

By county, there are also differences to highlight in the average retirement age. In the most economically developed regions, workers retire earlier, as in Navarre and Euskadi, where they retire shortly after the age of 64. On the other side of the scale are Ourense, Santa Cruz de Tenerife, or Ceuta, all over the age of 65 and a half.

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