Retirees who collect a retirement pension and do some self-employment will be able to earn slightly more in 2027 without having to contribute to Social Security. The Ministry of Labor intends to raise the minimum wage to 1,286 euros per month, 5.3% more than now, so that if the income limit that allows them to collect the entire pension without contributing is approved, it will be set at 18,004 euros per year.
Social Security allows 100% of the pension to be made compatible with self-employment without contributing as long as what is earned in the year does not exceed the minimum interprofessional salary (SMI) in annual calculation. This is stated in article 213.4 of the General Social Security Law (you can read it at this link), according to which the collection of the pension “will be compatible with the performance of self-employed work whose total annual income does not exceed the minimum interprofessional salary, calculated annually.”
The same article adds that those who do these jobs “will not be required to contribute to Social Security benefits.” That is, they do not have to register in the Social Security self-employed regime or pay the fee, although in exchange these activities “will not generate new rights over Social Security benefits”, so they do not increase the pension they already receive.
In the case of retirees who work under a contract for a company (as an employee), this rule does not apply, since it only applies to self-employed work, such as teaching, making repairs or selling what is grown in a garden. Furthermore, only those who collect a contributory retirement pension have it. Those who work as employees have to resort to other formulas, such as flexible retirement, which reduces the pension in proportion to the working day.
When calculating income, the expenses of the activity are subtracted from what is invoiced. This was established by the Supreme Court in a ruling, in which it establishes that “annual income must be computed in accordance with the parameters established by tax legislation and in net terms, that is, excluding deductible expenses in accordance with said tax legislation from the full income.”
How much will the income limit for retirees increase?
In 2026, the minimum wage is set at 1,221 euros per month in 14 payments, which is 17,094 euros annually. If the Council of Ministers approves the increase in the SMI to 1,286 euros, the limit will be set at 18,004 euros per year as of January 1, 2027.
In this way, the limit would rise by 910 euros per year, which would benefit retirees who now spend little. For example, a retiree who earns 17,500 euros a year from his activity (already deducting expenses) today exceeds the limit, but with the increase he would remain below it.
In the case of collecting the minimum supplement, it must be taken into account that the income limit to reach the minimum pension is 9,442 euros per year if you do not have a dependent spouse (cap for this 2026), but that it will be set again for 2027 with the revaluation of the pensions.
What happens if the retiree earns more than the minimum wage
In the case of exceeding the minimum annual salary, the retiree does not always lose the pension, but must notify Social Security and, if the activity is habitual, they will have to register as self-employed and pay contributions for the activity. Omitting it may result in Social Security claiming part of the pension, considering it an improper payment.
Upon registration, the retirement pension is incompatible with work, except for two general exceptions (artists and authors of literary, artistic or scientific works also have their own compatibility, with 100% of the pension). The first of them is through active retirement, which requires having delayed retirement for at least one year from the ordinary age and pays between 45% and 100% of the pension depending on the years of delay.
The second is through flexible self-employment retirement, which as of August 28, 2026 allows anyone who was not registered as self-employed in the three years prior to retiring to collect 25% of the pension.
Those born in 1962 will be able to retire in 2027 at age 65 if they have contributed 38 years and six months, but the rest will have to complete them or wait until 2029 to collect the pension without a cut.
Venancio Cócera, retired with almost 47 years of contributions since he was 14: “They reward me with a reduction coefficient of 13% of my pension”
Furthermore, in both formulas the minimum supplement is no longer charged while working. What does not change is that these contributions, as a general rule, do not improve the pension that is already recognized.