The Foundation for Applied Economics Studies has published an article on Monday in which it advocates for a “flexible retirement“, which allows retirees to continue earning income from work in addition to their pension. In this way, Fedea is committed to extend working life of the elderly in a Spain with little generational change.
Fedea researchers José Ignacio Conde-Ruiz and Jesús Lahera raise in their work the need to reform the legislation Spanish, both labor and pensions, forharness the potential of senior talent in Spain and adapt to the demographic reality.
Conde-Ruiz and Lahera consider that “the only way” to deal with the sustainability of the pension system is to “extend the labor stage”, so it is urgent to “radically change” the form of retirement. Fedea points out that the regulation of retirement in Spain “is drastic”, without a “gradual transition” between the stage of a full-time worker and that of a pensioner.
Only 14% of retirees have work income
In addition, once the worker becomes a pensioner, as a general rule, paid work is not allowed. Fedea acknowledges that there are legal exceptions, such as partial, active and flexible retirement, and self-employment capped by income, but they are “full of disincentives and dysfunctions.” In fact, only 14% of retirees in Spain they have income from work in addition to your pension. The second part of the work by Conde-Ruiz and Lahera proposes improvements to current legislation that would help broaden the use of existing mechanisms that would make work and pension compatible.
Uncapping the additional income of retirees
To do this, they propose to regulate partial retirement agreements with incentives, facilitate active or flexible retirement and stop capping additional rents of the retirees. In this way, the pension would be compatible with carrying out work for someone else or self without income limit.
In their article, they also present a more ambitious reform proposal to generalize a retirement fully compatible with paid work. This reform would make it easier for companies to hire older workers with a new compatible employment contract that takes into account that the pensioner is covered by public income.
Facilitate the hiring of retirees
In addition, once this compatibility between the perception of pensions and salary has been established, the pension system rulesso that the output of labor marketl be as flexible as possible, as Fedea points out.
In this sense, it recommends taking into account the physical demands of the profession, as well as the state of health of the worker. At the same time, he recommends a “gradual” retirementwith a reduction in working hours until full retirement.
