Early retirement

economic-dictionary

Pre-retirement is an agreement between an older person and his employer to end the employment relationship before the legal retirement age. This, in exchange for financial compensation from the company. It is a type of contract typical of the Spanish system.

Through early retirement, the company undertakes to make a periodic payment to the worker. This, until the individual reaches the legal age to make his retirement official before the authorities.

The rent offered to the employee who is going to retire early is close to his current income, although usually less. We refer, for example, to 80% of salary. These payments include the severance pay.

Early retirement also provides that the company regularly contributes to Social Security on the part of the worker. This, to guarantee that the person does not receive a lower pension than expected when the official moment of retirement arrives.

Difference between early retirement and other retirement modalities

Early retirement is different from early retirement because it is not a legal regime, but a pact between two private parties that is not regulated. That is, it is a contract that is not subject, for example, to a minimum age.

We must also differentiate that early retirement for extraordinary reasons such as disability or terminal illness. These circumstances are handled according to a series of norms established by the State.

Advantages and disadvantages of early retirement

One of the advantages of early retirement is that it allows you to end your working life early without major financial damage. This, even if the worker does not meet the requirements for early retirement.

It should be noted that the employee will receive periodic remuneration from the company until reaching the legal retirement age. In addition, as mentioned above, the continuity of your Social Security contributions is guaranteed.

On the other hand, it is advantageous for the company to sign these agreements in order to renew its personnel. In this way, better trained professionals can be hired.

However, we must note as a disadvantage that early retirement is not regulated. So, there is no clear legal system on which the worker can be based to agree with his employer. Everything will depend on your negotiating skills.

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