Most people reading this post will be either because they are or identify with the self-employed. As we already indicated in the article of a few weeks ago, it is not easy to deal with all the difficulties of a self-employed worker. Today we are going to focus on the retirement pension of the self-employed and how we can improve it.
Self-employed contributions
According to data from 2016, 86% of self-employed workers pay the minimum wage. That is to say, with regard to the Social Security (hereinafter, the S.S.), their income is 893.10 € per month (10,716 euros per year). This percentage is even higher if we only include those under 47 years of age: 93% pay the minimum contribution.
This fact has a series of consequences, the main one: all the benefits offered by the S.S. are greatly reduced ; both a temporary sick leave, as well as widow’s, orphan’s, disability and retirement pensions. We are going to talk about the latter to compare how it is affected.
Retirement pension for the self-employed
The comparison between the average public retirement pension of a self-employed person and a salaried employee is terrible:
- An employee: towards the end of 2015 he/she was paid €988 per month (right now it is already over €1,000).
- A self-employed worker has an average of 623 euros per month.
In short: the retirement pensions of a self-employed person are on average 37% lower, which is a real barbarity.
And this happens despite the fact that progressively, as retirement approaches, the self-employed try to increase their contribution base to try to also increase the pension they will have left.
The state of Social Security
The Social Security situation is very complicated, and without wishing to be alarmist, it is unknown how in 20 years’ time it will be possible to finance the pensions of retired people, which are increasing every year, to the detriment of a smaller active population.
As has already been pointed out by the Bank of Spain and the Spanish Government itself, pension plans are becoming an increasingly essential alternative, receiving in addition the tax advantage of a tax deduction that can reach up to 8,000 € of contribution per year (New in January 2021: the contribution has been limited to 2,000 € per year).
If you want us to help you to complement your retirement pension, looking for both financial and fiscal profitability, contact us and put yourself in good hands.
