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The changes that will come in retirement from January 2021

Last Thursday, December 3, the Congress of Deputies gave the green light to the draft of the General State Budgets (PGE) for 2021, with 188 votes in favor and 154 against, and which include news on retirement and pensions. Thus, the draft must be processed in the Senate to return to Congress and, predictably, receive final support to be approved on December 29.

Evolution of the 'piggy bank' of pensions.

Also, Congress has approved the expected pension reform of the Toledo Pact, after discussing the 21 recommendations included in the reform after four years of negotiation, which the central government must translate during the legislature. In this sense, What changes will there be in retirement from January 2021?

Revaluation of pensions with the CPI

First, one of the main measures of the pension reform is the recovery of the CPI (Consumer Price Index) as a reference indicator for the annual revaluation of the amount of pensions. In this way, Pensions will be revalued from January 2021 based on the CPI, so the amount would increase by 0.9% for next year, as contained in the draft General Budgets for 2021.

Another of the main contributions of the reform of the Toledo Pact includes a plan to clean up the accounts within a period set for the year 2023. Thus, the plan consists of separating the sources of financing to face a series of expenses detected as inappropriate for Social Security and begin to assume all that invoice from the public accounts of the General State Budgets.

Retirement age up to 67 by 2027

On the other hand, the reform of the Toledo Pact proposes ways to positively encourage the delay of the retirement age in Spain and thus extend the working life so that the real age of retirement is set by law. Nowadays, the effective retirement age in Spain is 65 years and 10 months, although the average is 64 years and six months.

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For this reason, it is advocated to delay that age to bring it closer to the legal one through incentives and hardening of early retirement. So, one of the proposed measures is to delay the retirement age to 67 in 2027. Therefore, as explained in the newspaper InformationFor this year there will be two legal retirement ages: 65 years and 67 years, the latter for those who do not reach 38 years and six months of contributions.

Therefore, to retire in 2021 at age 65, you must have contributed 37 years and three months or more. In the event of not meeting this requirement, the retirement age will be 66 years.

Another of the approved recommendations is that it is established that the pension must be calculated progressively based on the contributions made during 25 years of working life. However, the idea is formulated that the worker can choose the 25 years that suit him best, to avoid that the end of his career harms him.

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