The retirement age for most Spanish employees will increase to 67 under a new social security law passed by the Spanish Parliament, according to Towers Watson.
The changes are effective on Jan. 1, 2013, but are being phased in gradually and will not be fully implemented until 2027. Key changes include:
•The retirement age will increase from age 65 to age 67.
•To qualify for a full pension at the new retirement age, workers will need 37 years of social security contributions, instead of 35.
•Retirement at age 65 on a full pension is still possible if a worker has at least 38.5 years of contributions.
•Pensions will be calculated based on salary over the last 25 years of earnings, instead of 15 years.
•Workers may retire at age 63 on a reduced pension, provided they have at least 33 years of contributions.
The reforms will have an impact on employers’ compensation and benefit policies, said Towers Watson. Employers will need to review and, where necessary, adapt their employee retirement benefit plans, particularly those that are complementary to the social security pension.
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