Workers who, upon reaching their ordinary retirement age, decide to delay it, will see their retirement pension increased. In this way, the National Social Security Institute benefits those who choose to continue working with an additional percentage of 4% for each full year of extra contributions, or through a lump sum amount (pay it at once) that is collected at the same time they decide to retire. This benefit will affect all workers who access retirement pension contributory, that is, one that is accessed with at least 15 years of contributions.
This is regulated by article 210.2 of the General Social Security Law, which was modified by the Law 21/2021regulations that improved incentives for those workers who decided to delay their effective retirement age to the legal age. It should be remembered that before this reform, the options were more limited, but now the regulations allow this “prize” to be collected between an extra monthly percentage for life, a single payment at the time of retirement or, after the latest updates, a mixed formula that combines both options.
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It must be said about this incentive and what we must take into account, is that it is generated for each full year that you delay your retirement with respect to the corresponding ordinary age (remember Law 27/2011 establishes two, either 65 years or the one that corresponds to the transitional calendar of 67 years). If you opt for the monthly increase, that 4% will be added to the regulatory base forever. If a single payment is preferred, the Treasury will pay an amount that varies according to the initial pension and the years of contributions, and may exceed 12,000 euros per year of delay in the case of maximum pensions.
Now, we must keep in mind that this is useful for those who decide to continue working as an employee or self-employed without collecting a pension (that is, it should not be confused with active retirement, which is collecting part of the pension while working). Furthermore, if by applying the 4% monthly the resulting pension exceeds the maximum limit established by law (collecting more than the maximum pension), the difference can be received as an additional supplement, so that “cap” of the maximum pension can be broken, which we remember, is not possible except in this case or the supplement is completed due to the gender gap.
Estimated table of incentives for each year of delay in retirement
For workers who want to delay their retirement, but do not know how much the increase in payroll would be, in the following table you can see (approximately) how much a worker would earn for each year that they decide to delay their retirement, in accordance with the formulas established in article 210.2:
| Estimated initial pension (without bonus) | Option A: Monthly Increase (additional 4% for life) | Option B: Single Check (Single payment per year of delay) | Annual increase in pension (Option A in 14 payments) |
|---|---|---|---|
| €1,000/month | + €40 / month | Approx. €4,500 – €5,000 | + €560 / year |
| €1,500 / month | + €60 / month | Approx. €6,500 – €7,000 | + €840 / year |
| €2,000 / month | + €80 / month | Approx. €8,500 – €9,000 | + €1,120 / year |
| €2,500 / month | + €100/month | Approx. €10,500 – €11,000 | + €1,400 / year |
| Maximum Pension (approx. €3,175) | + €127 / month (additional) | Approx. €12,000 – €13,000 | + €1,778 / year |
Please note that the single payment figures are estimates based on the current actuarial formula (800xpension/500)1.65 and are not exact, as they may vary slightly, that is, it is an estimate. On the other hand, if more than 44 years and 6 months of contributions are proven, the single check increases by an additional 10%.
For workers who decide to delay their retirement, the choice between collecting the money “at once” or “little by little” will depend on their needs. That is, the monthly percentage option (Option A) is usually more profitable in the long term if the pensioner lives many years after retirement, while the check (Option B) offers immediate liquidity.
Now, it must be remembered that there is also a recently regulated mixed formula, which allows those who delay their retirement between 2 and 10 years to combine both incentives: receive a monthly increase (smaller, 2%) and, at the same time, a single payment equivalent to half of what would correspond to them if they chose only the check.
This is so since the regulations seek to make retirement more flexible, allowing each worker to adapt their exit from the labor market to their personal circumstances, rewarding the extra contribution to the system with a real increase in purchasing power at the retirement stage.