- Royal Decree 416/2026 regulates flexible retirement, which allows receiving a pension and working at the same time.
- Hours as an employee may be between 33% and 80%, and the door opens to self-employed work.
- It takes effect on 28 August 2026; the start of activity must be reported so that part of the pension does not have to be repaid.
On 26 May 2026 the Council of Ministers approved Royal Decree 416/2026 of 27 May, published in the official gazette on 28 May, which regulates flexible retirement, the arrangement that allows a contributory retirement pension to be combined with work. It repeals Royal Decree 1132/2002 and takes effect three months after publication, on 28 August 2026. It also amends the regime for deferred retirement, the option of delaying retirement in exchange for a supplement.
The main novelty is that the arrangement is no longer limited to part-time work as an employee. Hours may fall between 33% and 80% of those of a comparable full-time worker, and the pension may be combined with self-employment, provided the person was not registered as self-employed in the three years before the event giving rise to the pension. It can be requested at any time after the pension is granted.
How much is paid
With work as an employee, the pension is reduced in inverse proportion to the hours worked: the more one works, the less pension one receives. If the work starts at least six months after the pension is granted, an increase applies: an additional 25% for hours of 55% to 80%, and 15% for hours of 33% to 55%, calculated on the prior pension. With self-employment, the pension stays at 25% of its amount.
The maternity supplement, or the one for reducing the gender gap, is adjusted in the same proportion. The reduction takes effect on the first day of the month following the start of activity, and full restoration on the first day of the month following its end. For pensions below the minimum, the supplements are not received during the compatibility.
Reporting and incompatibilities
Anyone combining must inform the managing body of the start of activity, of any change of hours and of its end. If they do not, the part of the pension corresponding to the work is considered unduly paid, with an obligation to repay and possible penalties. It is a simple obligation, but one not to forget.
The compatibility is not complete. It is incompatible with a permanent disability pension arising from the activity carried out after retirement, and with the deferred-retirement supplement depending on the option chosen: if the additional percentage was chosen, it is suspended; if a lump sum or the mixed option was chosen, flexible retirement cannot be used. It is compatible with temporary incapacity and with birth and childcare benefit arising from the compatible activity.
What to review
Anyone close to retirement and considering continuing to work can compare the options with real figures: the pension they would be entitled to, the hours they want, the income from work and the effect of each band of the increase. Contributions during the compatibility, moreover, do not improve the pension already granted, except in specific cases of involuntary early retirement, a fact that affects the calculation.
For companies, it offers the possibility of keeping experienced people on reduced hours, and for family businesses, of organising succession gradually. Contracts, hours and the report to Social Security must be properly adjusted. Every case is personal; consult your employment and pensions adviser before deciding. Flexible retirements begun before 28 August will continue to be governed by the previous rules.
Gradual retirement can be a good bridge, as long as it is planned with numbers.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
