Both penalties and incentives within the pension system are likely keeping more people in the workforce past the age of 65.
The number of retirement-aged people still employed in Spain has almost doubled in the last seven years, to reach historic numbers.
Vozpópuli reports that the latest data from the Spanish National Statistics Institute (NSAID) show that 324,000 people 65 and older were working in the second quarter of the year, compared with 163,000 in the same quarter in 2016. This latest number is the highest of over-65s in the workforce since NSAID started counting in 2002.
Though the number of those working past the usual retirement age represents only 3.8% of the demographic, only 1.3% worked in the same quarter in 2016.
Without drawing definitive conclusions, the newspaper offers three possible reasons for the sharp uptick in retirement-aged employment, mostly related to pension policy.
In Spain, the retirement age was set at 65 in 1919 and remained at that age until 2011. Under the socialist-led major pension reform of that year, the country’s retirement age started to rise incrementally so that it would hit 67 in 2027.
In 2016, a person had to have paid into the pension system for 36 years—up from 35 years in 2013—to be able to receive a pension at age 65. Otherwise, he had to work four additional months before getting a monthly pension check. This year, the contribution period now stands at 37 years and nine months to receive a pension at age 65. Otherwise, a worker has to wait until he is 66 years and four months old to get a pension.
The government now also dangles incentives in front of workers to delay retirement, offering slightly higher pensions to those who keep working. Workers can also now opt for “active retirement,” which allows them to receive part of their pension at 65 while keeping a job, whether employed by someone else or self-employed.
Think tanks and the Spanish entrepreneurs association, Círculo de Empresarios, have also come out in favour of older workers and a greater extension of the retirement age. They view these measures as a means to ease the heavy burden on the Spanish pension system and a way to address the “demographic winter” of an ageing country with birth rates below replacement level.
The Círculo de Empresarios has recommended a voluntary retirement age between 68 and 72 years old.
“If you retire earlier, there would be a slight reduction in the pension, and if you retire later, an incentive,” the organisation’s president, Manuel Pérez-Sala, explained at a press conference.
In a similar vein, the bank BBVA’s research arm, BBVA Research, has published a new study analysing the reasons and benefits for a later retirement age for Spaniards. It concluded that not only would it help sustain the welfare state, but it also found that companies could boost productivity by keeping older workers on longer in addition to hiring younger people.
Loading ...