Self-employed, why change your contribution base?
Posted: Tue Dec 17, 2024 6:24 am
According to data from Social Security, just over 80% of the three million self-employed workers in Spain apply the minimum contribution base to their self-employed contributions.
Pension plans for self-employed workers
Traditionally, self-employed Spanish workers have turned to private pension plans for their retirement, to compensate for the loss caused by having paid less into Social Security than employees . According to data from the Ministry of Employment, retired self-employed workers in Spain currently receive, on average, a pension 32% lower than that of those who have worked for third parties.
Contribution base for self-employed workers
In addition to pension plans, self-employed workers have traditionally increased their contribution base as they approached retirement age in order to reduce this gap. For this reason, the Ministry of Employment and Social Security introduced mechanisms that discourage those who want to take this step with the sole objective of improving their pension.
Thus, from the age of 47, the ability of self-employed workers to freely increase their contribution base is limited . The logical thing, and what the law dictates, is that the contribution base increases as income increases, but that happens very rarely. It is also true that, despite public aid, there are also self-employed workers who are paying more than their real income.
When to change the contribution base?
In order to obtain the maximum pension , self-employed communication email list workers should therefore start increasing their contribution base before they turn 47. For those who do not do so, the following limits have been established this year:
Those under 47 years of age may freely change their contribution base.
Those who have already exceeded this age by 1 January will only be able to freely increase their contribution base if their contribution base at the end of 2014 was at least 1,926 euros per month.
Those over 47 years of age with a contribution base of less than 1,888.80 euros may only increase it up to 1,945.80 euros.
Those over 48 years of age will be able to have a contribution base between 953.70 and 1,926.60 euros if they did not reach 1,888.80 euros in 2014.
Those over 50 who have paid contributions for at least five years will be able to choose between 884.40 and 1,926.60 euros per month.
Workers who register as self-employed after turning 47 can freely choose their contribution base.
Self-employed workers must choose the contribution base correctly , not only based on their income but also on their age.
Pension plans for self-employed workers
Traditionally, self-employed Spanish workers have turned to private pension plans for their retirement, to compensate for the loss caused by having paid less into Social Security than employees . According to data from the Ministry of Employment, retired self-employed workers in Spain currently receive, on average, a pension 32% lower than that of those who have worked for third parties.
Contribution base for self-employed workers
In addition to pension plans, self-employed workers have traditionally increased their contribution base as they approached retirement age in order to reduce this gap. For this reason, the Ministry of Employment and Social Security introduced mechanisms that discourage those who want to take this step with the sole objective of improving their pension.
Thus, from the age of 47, the ability of self-employed workers to freely increase their contribution base is limited . The logical thing, and what the law dictates, is that the contribution base increases as income increases, but that happens very rarely. It is also true that, despite public aid, there are also self-employed workers who are paying more than their real income.
When to change the contribution base?
In order to obtain the maximum pension , self-employed communication email list workers should therefore start increasing their contribution base before they turn 47. For those who do not do so, the following limits have been established this year:
Those under 47 years of age may freely change their contribution base.
Those who have already exceeded this age by 1 January will only be able to freely increase their contribution base if their contribution base at the end of 2014 was at least 1,926 euros per month.
Those over 47 years of age with a contribution base of less than 1,888.80 euros may only increase it up to 1,945.80 euros.
Those over 48 years of age will be able to have a contribution base between 953.70 and 1,926.60 euros if they did not reach 1,888.80 euros in 2014.
Those over 50 who have paid contributions for at least five years will be able to choose between 884.40 and 1,926.60 euros per month.
Workers who register as self-employed after turning 47 can freely choose their contribution base.
Self-employed workers must choose the contribution base correctly , not only based on their income but also on their age.