Spanish pension guide: How to claim a pension in Spain as an expat
The pension in Spain is generous and foreigners working in Spain will get a Spanish pension if they meet certain conditions, all explained in this Spanish pension guide.
Spain, similar to other European countries, has a mandatory Spanish pension system that is funded by contributions to the social security system. Spain operates a three-pillar pension system which is dominated by a compulsory and generous state pension in Spain, alongside a much smaller market of voluntary company pensions and private pension schemes for those who want to boost their Spanish pension rates.
Foreign residents who work in Spain are entitled to claim a Spanish pension providing they meet certain criteria, and in some cases international pensions can be transferred to or count towards your pension in Spain. However, major government reforms in recent years aim to reduce Spanish pension rates, although they still remain considerably higher than international standards.
This guide to the Spanish pension system explains the essential information to claim a pension in Spain, including eligibility criteria, Spanish pension rates, the pension age in Spain, Spanish tax allowances for pensioners, and types of Spanish pension available to foreigners.
This Spanish pension guide includes:
- Who can get a Spanish pension?
- Pension age in Spain
- Expat pensions in Spain
- Spanish pension rates
- How the Spanish pension system works
- Private pensions in Spain
- Spanish pension application
- Survivor's pension in Spain
- Pension allowances and support
- Spanish pension contacts
In order to qualify for the minimum state Spanish pension, you must have worked and paid Spanish social security contributions for at least 15 years. In order to claim a full Spanish pension rate, however, you must have worked and contributed for at least 35 years. An additional condition is that at least two years must be within the 15 year period immediately preceding the pension claim. There are exceptions that also count towards your contribution period, for example, maternity leave, unemployment or certain workplace hazards; see the list here.
By 2027, however, the government plans to raise the minimum contribution period from 15 to 25 years and the threshold for claiming the maximum Spanish pension rate from 35 to 38 years. Read conditions here.
If you have moved to Spain from another European Union (EU) country, your insurance contributions in other EU member states can count towards calculating your eligibility for a Spanish pension. Spain also has many bilateral agreements with non-European countries, enabling many foreigners to transfer or combine pension benefits from abroad to Spain (explained below).
Self-employed workers are also entitled to a Spanish pension, providing they have registered and paid social security contributions into the self-employed social security fund.
The current pension age in Spain is 65 years for both men and women, which will rise incrementally to 67 years by 2027 (see the exact Spanish pension age for each year). Retirement will still be possible from 65 years, however, if you have paid 38.5 years of social security contributions.
Retirment – including partial, flexible and forced retirement – before the official Spanish pension age is possible from age 60, or 61 if not associated with a union, if you have paid a minimum of 30 years of contributions (or 15 years if an exemption applies). Your Spanish pension rates might be penalised if an exemption doesn't exist. If you have a disability or work in certain jobs with high hazard rates, for example, you may be able to claim a full Spanish pension from age 60, or earlier down to age 52 in some situations.
However, in line with other pensions reforms being phased in between now and 2027, the early pension age in Spain will be raised to 63 years.
Spain has bilateral social security agreements with numerous countries worldwide that allow citizens to combine or transfer pension benefits in order to qualify for a pension in Spain or get higher Spanish pension rates.
If you are an EU citizen, every country where you have worked and contributed to social security for at least one year can count towards your old-age pension. So if you only worked in Spain for 10 years but previously worked in the UK for 20 years, you can qualify for a pro-rata Spanish pension as well as a pro-rata UK pension (ie. you will receive a reduced pension rate only for the years you worked). You will start receiving these pensions once you reach the legal pension age in each country, so the amount you receive may vary if these pension ages are staggered. The EU webpage provides a detailed guide and example of calculations.
Spain also has bilateral social security agreements with the following non-EU countries, which provide varying conditions for transferring pension and social security benefits depending on the country.
Spanish tax allowances pensioners
Spain is also working on a multilateral Latin American social security agreement with several countries, such as Argentina, Bolivia, Brazil, Chile, Ecuador, El Salvador, Paraguay and Uruguay.
You may also be able to transfer private pension earnings without incurring charges through an overseas pension scheme. For UK pensioners in Spain, this is possible through a Qualifying Recognised Overseas Pension Scheme (QROPS) commonly used by UK citizens who move abroad with private pension funds. Read if QROPS is a pension option for you and how to make QROPS work for you, plus the challenges and solutions for retirement planning abroad.
In some cases there may be Spanish tax allowances for pensioners to attract them to withdraw an annuity pension (or anualidad, annuity in Spanish) over lump sum payouts (or suma global, lump sum in Spanish) or other pension options. In any case, an expert is advised to assess what applies in your specific situation.
Spanish pensions are funded by contributions from employees at around 4.7 percent of their salary, while employers contribute the equivalent of 23.6 percent of an employee's salary. Spanish pension rates are relatively high, amounting up to 81 percent of earned income if paid at the maximum amount.
Spanish pension rates are calculated on how much you earned and how many years you worked and made contributions in Spain. If you work the minimum 15 years requirement for a Spanish pension, you will be entitled to at least 50 percent of the maximum payout. Spanish pension rates then rise in percentage for each additional year worked, reaching a maximum 100 percent for those who worked 35 years. Spanish pension rates are capped at a maximum claim of EUR 2,548 per month, although average Spanish pension rates are around EUR 900 per month.
Incentives are offered on Spanish pension rates to encourage people to work longer; typically in the form of a reduction of Spanish pension rates (up to 8 percent) for every year taken before Spanish pension age, and an increase in Spanish pension rates (two to four percentage points) for every year worked past Spanish pension age or the year you qualify for a Spanish pension (ie. you have worked 25 to 37 years).
The Spanish Pensions Office is responsible for calculating and paying Spanish pension rates. You can roughly work out what your pre-tax pension rate will be by calculating 81 percent of your gross annual salary and adjusting accordingly if you made less than 35 years of contributions (deducting 2–3 percent for each year). See an explanation of how Spanish pension rates are calculated.
If you are self-employed, you will be responsible for paying all of your social security contributions as there is no employer to top them up, meaning self-employed workers personally pay more towards their Spanish pension. Self-employed workers must also always pay a minimum monthly social security contribution, regardless of earnings. Pension benefits will depend on the social security fund.
The Spanish pension system is made up of three pillars:
- The state Spanish pension makes up the first pillar and is compulsory for all residents working in Spain, with strict regulation on who can claim and when; it also covers survivors' pensions.
- Company and employee pensions make up the second pillar, and conditions and availablility depend on the employer.
- Private pensions make up the third pillar, which are voluntary and typically have more flexible conditions than the state Spanish pension, for example, some allow you to withdraw your savings before the Spanish pension age.
The state pension in Spain (first pillar) covers two categories under which people can claim benefits: a contributory pension (based on employment and social security contributions in Spain) and a non-contributory pension, designed to ensure a basic economic level for residents in Spain who don't qualify for any other pension support, particurlarly targeted at low-income households and those with disabilities. In 2000 a Social Security Reserve Fund was created to help finance future investments through investing current surpluses.
The contributory Spanish pension rates are among the highest in Europe, in terms of percent of work earnings. However, Spain – like most economically advanced countries – is experiencing a rapidly ageing population together with a declining birth rate. This has led the government to look at implementing a number of pension reforms aimed at reducing pension spending from 9 percent to around 3.5 percent of GNP, expected to include a reduction in pension benefits, an increase in social security contributions and a reduction of the annual contribution maximum to EUR 8,000 annually for employers and employees.
The recent pension reforms also mean that the Spanish pension system is no longer directly linked to inflation but rather benefits will be uprated based on a complex calculation, although a minimum guarantee of 0.25 percent is set per year. Inflation will be factored in when the social security system is in surplus, although never more than 0.50 percent above inflation. From 2019 it is also expected that Spanish pension rates will be linked to 'sustainability factors', such as life expectancy, number of pensioners and economic environment.
A reduced state Spanish pension rate is designed to boost the second and third pillars of the Spanish pension system, coupled with incentives to attract more people to use pension plans as savings vehicles, for example, allowing access to second-pillar pension savings after 10 years.
Tax benefits will also be offered via new private third-pillar pension plans known as 'Ahorra 5' which allow savings up to EUR 5,000 that can be claimed after five years onwards; a guarantee of 85 percent and no taxes before five years is offered. Another tax incentive will be offered to pensioners over 65 who sell property assets in Spain, where gains will not be taxed for real estate sales up to EUR 240,000 a year if an annuity pension plan is taken out.
Little incentive is offered to the second pillar – company pension plans – meaning the market still offers limited choice for investment and little flexibility, compounded by changing and uncertain regulations. Some experts say Spain's extensive reforms have been marginal in addressing serious issues in the second and third pillars, and will do little to stimulate growth in these sectors.
As the state pension in Spain's provision is high in terms of wage replacement levels, occupational and private pension plans are not as well developed as in many other countries. Although private coverage is relatively high at around 54 percent of the working population, contributions from those participating are very low.
Occupational pensions in Spain are not widespread beyond larger and more internationally renowned companies, with only some 7 precent of employers offering plans at present, and a quarter of these are reserved for executives only. Although traditionally financed entirely by the employer, these are becoming more contributions-based with employees contributing between 20–35 percent.
Other options are private pensions in Spain via a pension fund or direct insurance, which enable participants to make individual contributions at an agreed rate. These are offered through financial institutions such as banks and insurance companies and are administered by investment managers.
Spanish tax legislation on private pensions allows annual contributions up to EUR 10,000 or 30 percent of your salary (whichever is lower) to be made tax-free (or EUR 12,000 or 50 percent of salary for those over 50). Residents in Spain can claim this tax exemption on their annual tax return.
To apply for a Spanish pension, you must visit your local INSS to submit a pension application form and necessary documents within three months before or after your last day of work. Once this has been completed, the INSS will process the application. Pension payments will be typically backdated to your last working day up to a maximum of three months (see the process here). If you have a digital certificate, you can check online Spanish pension applications and forms.
If at any point your financial or family situation changes, for example you remarry, you need to report such changes to the management authority that handles your Spanish pension. Financial and family variations can affect your pension rate in Spain, and you may receive undue benefits which will typically have to be paid back. The obligation to repay unduly received pension benefits expires after four years, although conditions apply. Read more on reporting changes.
In the event of someone passing away, a survivor's pension can be paid to a surviving spouse or children under the Spanish pension system. This is providing the deceased made the minimum 15 years of social security contributions or at least 500 days contributions in the last five years on a private insurance plan. The spouse remains eligible as long as he or she has not remarried.
This widow's or widower's Spanish pension is calculated according to the employment status of the deceased, whether the cause of death was work or non-work-related, the income level of the spouse and whether they have dependants. The amount will be between 50–70 percent of the deceased's pension entitlement.
Surviving children aged under 21 (or those with disabilities over that age) are entitled to an orphan's pension if they lose a parent. This is calculated at 20 percent of the deceased's pension entitlement, or up to 70 percent if the child loses both parents. This entitlement ends if the child is adopted or marries.
Survivor's pensions are also calculated and administered by the Spanish Social Security Institute.
For those who are not eligible for the contribution-based Spanish pension and who do not have sufficient income, a basic pension in Spain can be provided via the Compulsory Old Age and Disability Insurance – or Seguro Obligatorio de Vejez e Invalidez (SOVI) – which is not dependent on a contributory system but based on need. This might be because they did not participate in the workforce in Spain, did not earn enough to make social security contribution or didn't work long enough to qualify for the contributions-based Spanish pension.
The Non-Contributory Pension (PNC) ensures all Spanish citizens aged over 65, or 60 in the case of disabilities, in need of economic help can access free medical-pharmaceutical assistance, complementary social services and a pension payment top up to a threshold of EUR 5,150.60 per year (in 2016, although this increases if you have dependents). It is also offered to foreigners whose household incomes are less than the set threshold and who have lived in Spain for at least 10 years within the last 15 years, including two consecutive years immediately prior to claiming a Spanish pension. Your pension rate will depend on your income and number of dependents, although a minimum is set at 25 percent of the threshold (EUR 1,287.65 annually in 2016). You can find conditions and forms, and find out where to make an application.
The basic amount of this pension in Spain is EUR 407 per month if the recipient is not drawing on any other pension. If another pension is being paid (eg. widow's pension) then the amount is reduced to EUR 395.20 per month. These payments are made in 14 monthly instalments, with additional instalments made in June and November. Those with disabilities need to claim their pension in Spain directly, rather than have it claimed by a carer or guardian, to be eligible for the two additional months.
The non-contributory pension in Spain is means-tested, thus income is a factor. Other non work-related finances, such as savings or incomes of those living with the applicant, are taken into consideration when assessing eligibility. Claims are handled by each region's pension authority.
- Social security office: Pensions in Spain
- IMSERSO (Instituto de Mayores y Servicios Sociales): Spain's institute for pensioners and social services
- Espacio Mayores (Pensioners Space): Government initiative to provide pensioners with integration, cultural, sports and legal information.
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