Retirement in 2027: Key points for planning ahead and anticipating labour costs

Retirement in 2027: Key points for planning ahead and anticipating labour costs

Next year marks the end of the phased increase in the statutory retirement age that began in 2013. At the same time, some of the rules for calculating pensions will change, and social security contributions that fund the system will rise. Understanding these changes can help individuals plan their retirement and employers anticipate the impact on staffing costs.

The question most people approaching retirement ask is when they will actually be able to retire. In 2027, the statutory retirement age will be 65 years for individuals who have at least 38 years and 6 months of contributions, and 67 years for individuals who do not reach that threshold. In 2026, retirement at 65 requires 38 years and 3 months of contributions, while the statutory retirement age for those who do not reach that threshold is 66 years and 10 months.

A difference of just a few months in a person’s contribution record can therefore change their statutory retirement date. Before making a decision, it is advisable to review their Social Security contribution record and calculate how much contribution time they will have accrued by their intended retirement date, bearing in mind that early retirement and other forms of retirement have their own requirements.

Retirement age and pension amounts are governed by different rules

From 2027, 37 years of contributions will be required to apply the full 100% rate to the pension calculation base, six months more than in 2026. This does not mean that 37 years of contributions are enough to retire at 65: doing so requires 38 years and 6 months. Nor does it guarantee that the final pension will equal the calculation base, as pension caps and, where applicable, reductions for early retirement may apply.

Another change concerns how the pension calculation base is determined. The Spanish Social Security system will automatically compare the formula based on the last 25 years with an alternative that examines 308 months and uses the 304 highest monthly contribution bases. In 2027, this second method allows four months to be excluded from the period examined, after the statutory rules on updating contribution bases and filling contribution gaps have been applied.

Which method will be better? That will depend on each person’s contribution history. Someone whose salary has risen over time may obtain a different result from someone with periods of low contributions or gaps towards the end of their working life. The automatic comparison means applicants do not have to choose a formula when applying for their pension, but it does not replace an individual simulation before deciding when to retire.

The changes will also be reflected in payslips

The Intergenerational Equity Mechanism (MEI) contribution will increase from 0.90% in 2026 to 1% in 2027. Under the General Social Security Scheme, 0.83 percentage points will be paid by the employer and 0.17 by the employee. The increase is small on each payslip, but it should be included in annual labour cost forecasts.

The solidarity contribution for higher earners

Salaries exceeding the maximum contribution base will also be subject to a higher additional solidarity contribution. In 2027, a rate of 1.38% will apply to the portion of pay up to 10% above the maximum base; 1.50% to the portion between 10% and 50% above it; and 1.75% to the portion beyond that threshold. These rates apply in bands only to pay above the maximum contribution base, not to the full salary. The contribution is shared between employer and employee in the same proportions as contributions for common contingencies.

Planning ahead

The first step for individuals approaching retirement is to review their Social Security contribution record, contribution bases and possible retirement dates and pension amounts. For companies, the end of 2026 offers an opportunity to review upcoming retirements, update staffing budgets and check the payroll settings applicable from January.

At Bové Montero, we support companies and HR teams with this analysis. Our Employment Law Department can review individual retirement circumstances, assess their impact on workforce planning and support adjustments to payroll and social security contribution calculations. Where necessary, we also coordinate tax matters to provide a complete picture of each decision.