How pensions are calculated in Spain
How much retirement pension are you going to receive? The way the state pension in Spain is calculated has been evolving constantly since the 2013 reform and is always at the mercy of political decisions to ensure the sustainability of the system.
Three key elements are used to calculate how much pension you will get: the amount you have paid in, the number of years you have worked (contributed), and your retirement age.
Basically, the first element is used to calculate your regulatory base, which sets the maximum amount of the pension. The second determines the percentage of that regulatory base that you are going to receive, and that does not have to be 100%. Finally, the third is conditional, meaning that if you retire early you will also not receive 100% of the pension.
From this point on, each of the components has its own rules, which are what you need to understand to find out how much state pension you can expect when you retire.
How to calculate the regulatory base of a retirement pension
The first step in calculating your pension is to know your regulatory base. How many years are taken into account when calculating the regulatory base? In 2023, the magic number is 25 years.
The regulatory base for a retirement pension is calculated by dividing the contribution bases for the 300 months prior to the month before retirement by 350.
In other words, the contributions paid in the 25 years prior to retirement are added up and divided by 350. As 25 years is a long time and inflation will have been at work, what actually happens is that the contribution bases from the final 24 months are taken at their nominal value and the rest are updated in line with the CPI.
The calculation of the regulatory base also takes into account possible contribution gaps or periods in which you were not able to pay into the system due to loss of employment or for personal reasons and there is a formula to cover these that is currently under debate.
According to the current model, if within the 350 months you pay into the system there is a contribution gap, the first 48 months will be taken as 100% of the minimum contribution base of the General Regime and the rest at 50% of that minimum base.
This is the current situation, which may however change in the future. In fact, Royal Decree-Law 2/2023 makes it possible to opt for the previous formula for calculating the regulatory base or to take the last 29 years as a reference and discard the two worst ones.
To make the procedures easier, the Social Security has developed a tool you can use to calculate your regulatory base, which can be accessed through this link.
If you prefer something simpler and more comprehensive, you can use our pension simulator.
How many years do you have to pay contributions to receive 100% of the regulatory base?
The second key point for calculating your retirement pension is the number of years you pay into the system. To begin with, to qualify for a contributory retirement pension you must pay into the system for a minimum of 15 years (of which at least 2 years must have been during the last 15 years prior to your retirement). Individuals who do not attain this period are entitled to another type of Social Security pension, the non-contributory pension.
Those 15 years give you the right to collect 50% of the regulatory base. Each additional month you contribute for increases the percentage of the regulatory base that can be collected up to 100% when you have contributed for 37 years.
Specifically, for each of the 49 months following the minimum 15 years you add an additional 0.21% to the regulatory base and for each of the next 209 months you get an additional 0.19% until you reach 100%.
Furthermore, these percentages will evolve over time up to 2027, when the pension reform that began in 2013 will conclude. The following table summarizes this evolution.
| Percentage - Retirement - Years of contributions | ||||||||
|---|---|---|---|---|---|---|---|---|
| Applicable period | First 15 years | Additional years | Total | |||||
| Años | % | Additional months | Coefficient | % | Years | Years | % | |
| 2013 to 2019 | 15 | 50 | 1 to 163 | 0.21 | 34.23 | |||
| 83 remaining | 0.19 | 15.77 | ||||||
| Total 246 months | 50.00 | 20.5 | 35.5 | 100 | ||||
| 2020 to 2022 | 15 | 50 | 1 to 106 | 0.21 | 22.26 | |||
| 146 remaining | 0.19 | 27.74 | ||||||
| Total 252 months | 50.00 | 21 | 36 | 100 | ||||
| 2023 to 2026 | 15 | 50 | 1 to 49 | 0.21 | 10.29 | |||
| 209 remaining | 0.19 | 39.71 | ||||||
| Total 258 months | 50.00 | 21.5 | 36.5 | 100 | ||||
| From 2027 onwards | 15 | 50 | 1 to 248 | 0.21 | 47.12 | |||
16 remaining | 0.19 | 2.88 | ||||||
| Total 264 months | 50.00 | 22 | 37 | 100 | ||||
Source: Seguridad Social
Retirement age also matters
Finally, the age you retire is another condition. For example, in the case of voluntary early retirement (which allows the employee to retire 2 years earlier than the normal retirement age), a series of reduction coefficients will be applied depending on the number of years paid into the system. These coefficients are different if the retirement is taken for reasons beyond the contributor’s control, in which case the contributor may retire up to 4 years before the normal legal retirement age.
These percentages reduce the amount of the pension, depending on how early the retirement is. In the case of voluntary early retirement they are as follows:
| Contribution period: less than 38 years and 6 months | Contribution period: equal to or more than 38 years and 6 months and less than 41 years and 6 months | Contribution period: equal to or more than 41 years and 6 months and less than 44 years and 6 months | Contribution period: equal to or more than 44 years and 6 months | |
|---|---|---|---|---|
| Months retirement brought forward | % reduction | % reduction | % reduction | % reduction |
| 24 | 21.00 | 19.00 | 17.00 | 13.00 |
| 23 | 17.60 | 16.50 | 15.00 | 12.00 |
| 22 | 14.65 | 14.00 | 13.33 | 11.00 |
| 21 | 12.57 | 12.00 | 11.43 | 10.00 |
| 20 | 11.00 | 10.50 | 10.00 | 9.20 |
| 19 | 9.78 | 9.33 | 8.89 | 8.40 |
| 18 | 8.80 | 8.40 | 8.00 | 7.60 |
| 17 | 8.00 | 7.64 | 7.27 | 6.91 |
| 16 | 7.33 | 7.00 | 6.67 | 6.33 |
| 15 | 6.77 | 6.46 | 6.15 | 5.85 |
| 14 | 6.29 | 6.00 | 5.71 | 5.43 |
| 13 | 5.87 | 5.60 | 5.33 | 5.07 |
| 12 | 5.50 | 5.25 | 5.00 | 4.75 |
| 11 | 5.18 | 4.94 | 4.71 | 4.47 |
| 10 | 4.89 | 4.67 | 4.44 | 4.22 |
| 9 | 4.63 | 4.42 | 4.21 | 4.00 |
| 8 | 4.40 | 4.20 | 4.00 | 3.80 |
| 7 | 4.19 | 4.00 | 3.81 | 3.62 |
| 6 | 4.00 | 3.82 | 3.64 | 3.45 |
| 5 | 3.83 | 3.65 | 3.48 | 3.30 |
| 4 | 3.67 | 3.50 | 3.33 | 3.17 |
| 3 | 3.52 | 3.36 | 3.20 | 3.04 |
| 2 | 3.38 | 3.23 | 3.08 | 2.92 |
| 1 | 3.26 | 3.11 | 2.96 | 2.81 |
Source: Seguridad Social
Similarly, delaying your retirement will positively affect the amount you will receive later on. As long as you have satisfied the minimum contribution period, you will be entitled to an increase in your pension for each full year you pay into the system.
Specifically, you will be able to add an additional 4% for each full year contributed after reaching the legal retirement age.
There is also a supplement to reduce the gender gap, which adds 30.40 euros for each child up to a limit of four for people whose professional career has been affected by having or adopting children.
Finally, individuals who have paid 15 years of contributions but whose pension calculation result is lower than the minimum pension may request a minimum pension supplement to make it up to that amount.
Requirements for retirement in Spain
One thing is understanding how to calculate your state pension and another is knowing when you can access it.
To draw your contributory retirement pension it is necessary to:
- Have paid into the system for at least 15 years, two of which must have been within the 15 years immediately prior to your retirement.
- Reach the legal retirement age, which in 2023 is 66 years and four months. This age will continue to rise steadily until it reaches 67 in 2027.
- It is also possible to retire at 65, as long as you have made at least 37 years and 9 months of contributions by 2023. By 2027, this figure will be 38 years and 6 months.
- Additionally, there is the possibility of accessing voluntary early retirement two years before the normal retirement age (four years earlier, if the retirement is not voluntary), as well as other forms of retirement such as flexible or active retirement.