The problem is known, the aging of the population and its impact on pensions; But the approach formulated by the Foundation for Applied Economic Studies (Fedea) is novel, due to the radical nature of the approach. If the question is to get people to work longer and to do so voluntarily, the question is to motivate them, and to do so, what is proposed is that work be compatible with the entire pension. To be more specific, establish a new contract for older workers, compatible with the pension and to avoid rejection by companies, without severance pay. And all this by unifying the modalities of retirement into a single one from the first possible age of early retirement, which would be set between 61 and 63 years.
“It's like turning the socks inside out” to the current Spanish legislation, says Ángel de la Fuente, director of Fedea. It all starts from the consideration that this legislation is designed under the premise that older workers are “annoying,” because it is based on a fallacy: “The erroneous perception that older people take jobs away from young people,” says José Ignacio. Conde-Ruiz, co-author of the Fedea study on “Aging and Retirement”, which was presented this morning. With the current system, people go from working full-time to working 0 hours, the report highlights. “We are wasting a large amount of increasingly educated workforce, in better health conditions and who may want to continue working if the conditions are adequate,” explains another of the authors of the work, Sergi Jiménez.
The problem is that the current legislation is very restrictive with regard to the compatibility between work and pension. As a general rule, it is impossible to make them compatible and the few exceptions that exist have many disincentives, both in partial and flexible retirement. Furthermore, in the case of combining pension and self-employment, salary income cannot exceed the minimum interprofessional wage (SMI). That is to say, they are rather small exceptions to the great rule of not being able to make compatible.
This is where Fedea proposes a significant twist. That the retiree can continue working without restrictions, that is, choosing full-time or part-time, in the same or different company, as an employee or self-employed, and, very significantly, without maximum remuneration limits and with a pension that is 100% compatible. hundred with any salary or income. These workers who would combine work and pension would continue contributing and their pension would be recalculated positively once they stopped working.
An important element of the proposal is that, to avoid creating a disincentive to hiring, these new contracts would not have severance pay. It is based on the premise that the worker already has the security of his public pension, and therefore, it is considered that it would not make sense for him to increase his potential compensation. What is proposed is to establish a minimum notice period for both parties to break the contract.
“The severance pay clauses should be ended” in this new employment contract, says Ángel de la Fuente, who adds that “the moment we reach retirement, we wipe the slate clean. You can continue working, but if at any time the company decides that it no longer needs you, it can fire you without compensation as large as the current system.”
