How to calculate your retirement pension in three easy steps

How to calculate your retirement pension in three easy steps

Would you know how to calculate the retirement pension that corresponds to you when you have to retire? Most workers would answer no to this question, thinking that the calculation is complicated and far from the knowledge of ordinary mortals.

Nothing is further from reality; calculating the retirement pension is much simpler than you think, at least in most cases . It is only necessary to know how much we have contributed in recent years and apply three simple steps.

How is the retirement pension calculated?

In Spain, the retirement pension is calculated taking into account the contribution bases of the last years of your working life.

Specifically, in 2020 the last 23 years are taken into account , although the period considered will grow progressively until 2022. In 2021, it will be the last 24 years of contributions, and in 2022, the last 25.

Calculate the retirement pension in three steps

1. Add up all your contribution bases

As the retirement pension is calculated based on your contribution bases, you must collect and add all the contribution bases of the last 23, 24, or 25 years, depending on the year in which you retire.

But, where can you get your contribution bases? This is a concept that appears prominently on the worker's payroll. Even so, and given that collecting all the payrolls for more than two decades is an arduous task, Social Security makes available to workers the possibility of requesting the Contribution Bases Report, where all the bases for all the time worked are recorded.

2. Calculate the regulatory base

The result calculated in the previous section must be divided by a divisor that depends on the computable years of your contribution bases. 

The reason for this reduction is that pensions are paid in 14 payments, unlike contributions, which are paid in 12 payments.

3. Apply an adjustment percentage based on the years of contributions

Once the regulatory base is obtained, you must apply an adjustment percentage based on the years listed. And it is that to receive 100% of the pension it is necessary to have contributed a minimum number of years.

In 2020, the minimum contribution period to collect 100% of the pension is 36 years for those who retire at the ordinary age, although it will gradually increase until 2027.