Retirees who decide to go to work while collecting a retirement pension run the risk that Social Security may suspend their pension in addition to being able to claim the pension amounts collected while they were working, as it is considered an improper payment. This is established in articles 213 and 214 of the General Social Security Law, which says that working is incompatible with the pension, except for the modalities permitted by Social Security, which are active, flexible retirement or working on a self-employed basis with limited income.
Although these are the only options currently available, it should be noted that the Government is working on the implementation of a new reversible retirement model. For the moment, these are the only formulas through which a pensioner can resume his or her work activity within the limits established by the regulations.
The first option is flexible retirement, which allows you to collect part of your retirement pension while working part-time. On the other hand, there is active retirement, which is what makes it possible to make the pension compatible with the performance of a work activity, whether as an employed person or as a self-employed worker.
Now, what is the difference between both? Well, while flexible retirement only allows you to work part-time and reduces the pension in proportion to the hours worked, active retirement allows you to do so with full-time or part-time work, as long as the requirements to access the pension are met. In addition, the latter allows you to collect a percentage of the pension while maintaining professional activity, which currently varies depending on the time in which access to retirement has been delayed.
What happens if I start working and do not notify Social Security?
In the case of starting to work, whether as an employee or self-employed, you must notify Social Security so that it can approve it and modify the amount to the new situation. This is established in article 213 of the General Social Security Law, which explains that the enjoyment of the retirement pension will be incompatible with the pensioner’s work, except in the cases expressly provided for by law.
Furthermore, the same article says that carrying out work incompatible with the pension will end with the “suspension of the payment of the same during the time in which the activity is maintained.” In other words, pension and work can only be made compatible through the formulas provided by law and always meeting the required requirements.
Along with this, the law also says that the pensioner can “carry out self-employed work whose annual income does not exceed the minimum interprofessional salary on an annual basis”, so they can continue collecting the pension, although without the obligation to contribute for that activity or generate new rights to benefits.
A real example of incompatibility
To understand it better, let’s look at it with a real example of how a pensioner temporarily lost his pension and had to return 17,538.72 euros to Social Security for collecting a retirement pension while continuing to work. The man began to receive a retirement pension in Spain of 1,800 euros per month, but, at the same time, he decided to move to the United States and continue working there for several years, where he continued contributing and did not communicate this situation to the Spanish Social Security.
Upon returning to Spain, Social Security notified him of the incompatibility between the collection of the pension and the work carried out abroad, and demanded the return of 17,538.72 euros corresponding to the amounts received unduly during that period. Although it took the case to court, the Superior Court of Justice of Catalonia ruled in favor of Social Security, since the regulations clearly establish the incompatibility between the collection of the retirement pension and the performance of a work activity, even if this is carried out outside of Spain.