The workers who after a dismissal access forced early retirement, up to 4 years before their legal age, will see the amount of their pension reduced up to 30% of life, that is, forever. The General Social Security Law explains in its article 207 that they must face reducing coefficients for each month of advance with respect to its ordinary retirement age, although the standard also includes a special and more favorable calculation, known as “shadow contributions”, which allows adding future contributions in a hypothetical way to set a more beneficial reference retirement age and thus reduce the final penalty.
This is so, although the law establishes an ordinary retirement age (which is regulated in Law 27/2011), there are exceptions for workers who were fired years before reaching said age. Given the impossibility of finding work and fear that your pension is harmed, many are forced to retire in advance involuntarily. While this rule allows them to retire before, they must do so knowing that the pension will suffer a “penalty” that will apply to payrolls and extraordinary payments.
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Now, we must know that this is a right that only impaired workers can access involuntarily and that we should not confuse with voluntary early retirement. The key difference is that, although both demand long contribution races (in this case, a minimum of 33 years), the forced is only accessed by a non -voluntary cessation, such as a collective dismissal, and has a calculation mechanism that seeks to protect the worker.
What happens if I retire for a dismissal and not at my ordinary age?
Workers who retire in advance and involuntary will apply a direct economic penalty over their pension, as established in article 207 of the General Social Security Law. This explains that the amount will reduce a coefficient for each month or fraction of the month that the worker is missing to fulfill his legal retirement age, that is, more years, the greater the penalty will be the maximum that is 30%.
This means that the pension is trimmed because it is understood that by advancing age, more years of the benefit are enjoyed and that is why there must be an adjustment. The cuts depend on the quoted years and the advance time, the following coefficients being:
However, the law contemplates an exception to the general rule to soften this cut, which are the “shadow contributions.” This reduction in the penalty is applied by calculating the reference retirement age as if the worker had continued to quote until the legal age. This avoids the “double damage” of having to retire before and, in addition, with a higher reference age.
A real example of how reduction softens
To understand it better, let’s see it with a practical example. A worker with 38 years quoted is fired in 2025 and decides to retire at 64 years and 8 months, starting from a regulatory base of 2,100 euros per month. Without the special mechanism of “shadow contributions”, its situation would be unfavorable; As in 2025, 38 years and 3 months are needed to retire at 65 and he only has 38, his ordinary retirement age would be 66 years and 8 months. This would mean a 24 -month advance, which would imply a 15% cut on its pension, losing 315 euros per month.
However, this is where Social Security applies the hypothetical calculation and considers as if the worker had continued to quote the two years that they were missing, reaching theoretical quoted for about 40 years. With this figure, its new age reference for retirement becomes 65 years old. Therefore, the real advance for the purposes of the calculation is no longer 24 months, but only 4 (from 64 years and 8 months to 65), which reduces the cut to 2.50%, that is, about 52.50 euros.
In this way, thanks to this special calculation, this worker does not suffer a cut of 315 euros, but only 52.50, leaving a final pension of 2,047.50 euros. Although the decision to retire is forced, the regulations apply this formula for the economic reduction to be significantly lower.