New rules governing the combination of pensions and employment have come into force in Spain. Under certain conditions, retirees can return to self-employment while continuing to receive part of their pension. New financial incentives are also available to employees and those who choose to delay their retirement.
Spain Expat Press Editorial Team
by Marlon Gallego Bosbach
Retirees in Spain now have new options for continuing to work after reaching retirement. As of Friday, 28 August 2026, new rules governing what is known as flexible retirement have come into force.
The reform expands opportunities for people who are already retired to return to work. One of the key changes affects the self-employed: under certain conditions, they will also be able to resume working as autónomos while continuing to receive part of their state pension.
The government aims to make the transition from working life to retirement more flexible, while also creating incentives for people to remain active in the labour market for longer.
Self-employed people can also combine their pension with work
Until now, flexible retirement was primarily available to retirees who returned to part-time employment after retiring. Under the new rules, this option has now been extended to the self-employed.
Anyone already receiving a state pension who subsequently takes up self-employment will be able to continue receiving 25 per cent of their existing pension. However, an important condition applies: the individual must not have been registered with Spain’s self-employed social security system (RETA) during the three years prior to retirement.
The new rules are therefore aimed particularly at retirees who wish to return to work after retirement without having to give up their pension entirely.
Greater flexibility for retired employees
The rules are also changing for retirees who return to employment. The permitted working hours are being expanded. Those who combine their pension with part-time employment will now be able to work between 33 and 80 per cent of normal working hours. Previously, the range for this form of flexible retirement was between 25 and 75 per cent.
The amount of pension paid alongside employment will continue to depend on the number of hours worked. In principle, the more an individual reduces their working hours, the greater the proportion of their pension they may continue to receive. The aim is to make it easier for retirees to gradually return to the labour market or to continue working on a part-time basis after retirement.
Additional financial incentives
The new rules also introduce financial incentives for retirees who return to employment after having already retired. Those who take up part-time work at least six months after retiring may, under certain conditions, receive an additional bonus on the portion of their pension they are entitled to receive alongside their employment.
For those working between 55 and 80 per cent of normal hours, the additional incentive amounts to 25 per cent. If working hours are between 33 and 54 per cent, the additional bonus is 15 per cent. The measure is intended in particular to reward those who voluntarily return to the labour market after spending some time in retirement.
Delaying retirement is also becoming more attractive
The reform does not only affect people who are already retired. Financial incentives are also being improved for employees who choose to delay their retirement beyond the statutory retirement age.
Those who work longer and postpone their retirement can continue to choose between various forms of financial reward. These include a percentage supplement to their future pension, a one-off payment, or a combination of both options. In principle, the supplement can amount to four percent for each full year of postponement.
An important change concerns the combined option. If retirement is deferred over an extended period, full six-month periods can also be taken into account in the future. This enhances the financial incentive to continue working longer.
Why Spain is making pensions more flexible
The reform addresses a major challenge facing the Spanish pension system. In the coming years, an increasing number of people from the so-called baby boom generation will reach retirement age. At the same time, the number of retirees is rising, while the ratio of contributors to pensioners is coming under pressure.
The Spanish government is therefore trying to make continued employment more attractive for older people. Those who work longer continue to pay social security contributions while simultaneously postponing the start of full retirement benefit payments.
The reform thus pursues two goals: greater flexibility for employees and pensioners, and enhanced financial sustainability of the pension system.
Spain still lags behind when it comes to working in older age
Although the number of people combining a pension with paid work is rising, this model remains relatively uncommon in Spain. According to social security data, around 79,475 people were receiving both a pension and employment income in July—an increase of 9.5 percent compared to the previous year. However, relative to the total of approximately ten million pension recipients, this proportion remains low.
Spain also lags behind in a European comparison. According to comparable Eurostat data, only around 4.9 percent of people in Spain continued working after beginning to receive a pension. The EU-27 average was approximately 13 percent.
Experts continue to see problems
However, these new possibilities do not mean that the transition from work to retirement automatically becomes easier. Experts point out that the Spanish system remains relatively complex. There are various models – such as active, partial, and flexible retirement – each with different requirements and calculation methods.
The Organisation for Economic Co-operation and Development (OECD) also acknowledges progress in making the Spanish pension system more flexible, yet simultaneously warns of bureaucratic hurdles and a lack of information regarding existing options.
For many older workers, therefore, the decisive factor is likely to be not only the available legal options but also how easily they can actually be utilized.
What changes for pensioners?
This opens up several new possibilities for people who are already retired or are planning their retirement. Those who wish to continue working after retiring can—under certain conditions—return as part-time employees while simultaneously drawing a portion of their pension.
Self-employed individuals will also be able to resume working while continuing to receive 25 percent of their pension. Those who return to part-time employment after a period of retirement can also benefit from additional financial incentives. Another option is to postpone full retirement in exchange for higher financial benefits.
Which specific rule applies and the amount of the respective pension entitlement depend on the chosen pension model and individual circumstances.
A more flexible transition into retirement
With the new regulation, Spain aims to shape retirement less as a fixed point in time and more as a gradual transition. For some employees, this could mean continuing to work a few hours a week after officially retiring. For others, the option of returning to work after a few months of retirement might be appealing.
The new regulation is particularly relevant for the self-employed. For the first time, under the flexible pension scheme, they have the opportunity to resume self-employment after retiring while simultaneously drawing part of their pension.
The new rules are intended not only to create more freedom for older workers. They are also an attempt to keep more people in the workforce beyond the standard retirement age, in light of the aging population.
The reform has been in effect since Friday, August 28, 2026. Three key points are therefore particularly important: self-employed individuals can resume working under the flexible pension scheme for the first time, employees gain greater flexibility regarding part-time work, and working longer is more strongly rewarded financially.
