Spain’s retirement debate heats up: partial pensioning returns as law

A protracted battle over public sector retirement in Spain is escalating as the Ministry of Inclusion, Security and Migration rushes to implement a new decree-law. After over a year of stalemate, potentially impacting nearly 700,000 workers, a critical shift is finally being considered.

A crucial legal loophole reopened

The issue stems from April 2025 legislation tightening the requirements for ‘replacement contracts’ – a cornerstone of partial retirement schemes. Since then, public administrations have been unable to fulfil these stipulations, largely due to the imposition of mandatory fixed-term, full-time contracts for the ‘replacement’ worker. This requirement, easily met in the private sector, has created a significant hurdle within the rigidly budgeted and employment-limited public sphere.

Consequently, municipalities, universities, and other public bodies, representing approximately half of the affected workforce, have effectively frozen their partial retirement processes. But the government is poised to intervene.

New decree: a targeted solution

The proposed decree-law seeks to address this impasse with a targeted adjustment specifically for the public sector. The agreement reached with trade unions CCOO and UGT outlines two potential pathways to meet the legal requirement for a ‘replacement’ worker. Firstly, it allows utilizing candidates who have already completed a selection process but haven’t yet been appointed. Secondly, it facilitates the hiring of temporary staff tied to ongoing public employment applications.

Initially, the measure will focus exclusively on non-civil servant employees – the only public sector group with partial retirement provisions mirroring those in the private sector. However, CCOO is pushing for extending this right to civil servants, temporary staff, and those under permanent contracts.

Eligibility criteria: a delicate balance

Generally, partial retirement allows for an advance in retirement age of two to three years, accompanied by a proportionate reduction in working hours and salary. Key prerequisites include reaching the minimum eligibility age (three years before the standard retirement age) and fulfilling a minimum period of contributions, typically around 33 years, though this can be lower under certain circumstances. Furthermore, the reduction in working hours must fall within a defined range, usually between 25% and 50% – this constitutes the portion of the workload transferred to the ‘replacement’ worker.

Crucially, the contract for the replacement worker must be indefinite and full-time for a minimum of two years following the termination of the partial retirement agreement. The core distinction between civil servants and non-civil servants lies in the nature of their recruitment – civil servants undergo competitive examinations, while non-civil servants are hired through open competitions. Disposal mechanisms also differ significantly, and salary scales are fundamentally distinct.

Impact on pensions: a strategic calculation

Partial retirement allows for an immediate reduction in working hours and the commencement of pension payments proportionate to the agreed-upon reduction. The administration will continue to pay the remaining salary. This translates to a 50% pension payment if a worker reduces their hours by 50%, with the remaining 50% of their salary retained by the government. Importantly, the pension is calculated based on accumulated contribution bases up to the point of partial retirement, not on the potential bases that would have been accrued had the worker continued full-time employment until their standard retirement age. The new regulations allow for the accumulation of work time across days, weeks, months, or even years, aligning with individual agreements or collective bargaining.

The advantage of this model over traditional early retirement lies in the fact that partial retirement typically doesn’t reduce the final pension amount, particularly when facilitated through a ‘replacement contract.’ This is because the worker continues to accrue contributions even when reducing their hours, and there are no automatic reduction coefficients based on age.