Upon reaching our retirement age, many doubts arise, being one of these, how much they are going to collect from pension and how much they will take away from IRPF, that is to say what will be the amount you will receive in the bank once taxes are applied. In this sense, Alfonso Muñoz Cuenca, Social Security official, in the pension and performance area, has published a video on YouTube in which he explains whether the amount shown by the retirement simulator is net or gross.
As he explains, “the retirement informative gives us our gross pension amount in 14 payments,” corresponding to the 12 monthly payroll plus the two extraordinary Christmas and summer payments. That is, the figure that appears does not discount the taxes that the future pensioner must pay to the Treasury.
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How the IRPF is applied to the retirement pension
The official explains that the IRPF (Income Tax of natural persons) is a direct, personal and progressive state tax that taxes the income of natural persons, including contributory social security pensions. These pensions have the same fiscal consideration as wages, so they are subject to retention.
At this point, Muñoz Cuenca recommends going to the page of the Tax Agency: “For that what we have to do is go to the Tax Agency website where we will find a tool that, filling our economic data and our personal data, will tell us what percentage of IRPF we would apply to our retirement.” This tool can be accessed directly from the following link by accessing the electronic headquarters.
In the video he also informs of a practical issue that many do not know. “Like any other company, an IRPF will initially apply taking into account the income that goes from recognition to the end of the year,” he explains. Hence, “on many occasions, if for example our pension is recognized in the month of July, we are not applied to any IRPF unless expressly and voluntarily indicate it.”
Now, the following year social security will already be the payer during the entire fiscal year. As the official points out, “the following year, at the beginning of the year, the INSS will apply the correct income tax, since he will be the payer throughout the fiscal year.”
The obligation to pay like any other worker
Tax regulations establish that tax pensions are part of work returns and, as such, must be subject to withholding. In the words of the official himself: “Many of you have done that informative and you have asked me that if that amount of pension that the simulator was given was the net amount or the gross amount, and in the event that I had to apply the IRPF, what percentage would be applied to it.”
The answer, he remembers, is clear: it is always the gross amount, and the retention will depend on the economic and family circumstances of each pensioner.
The retirement simulator only reports the gross pension. To know the net amount, you have to take into account the retention of IRPF, which varies according to the income and circumstances of the pensioner. Although during the first year the retention can be minimal if the pension is recognized the annuity, in the following exercise it will regularize the situation and the corresponding type will be applied.