Can company administrators access active retirement?

A social court, contrary to what is established by the last criterion of the General Directorate of Social Security, recognizes the right of the sole administrator of a company to access active retirement, and to reconcile, therefore, 100% of the retirement pension with self-employed activity.

Active retirement of a company manager

A worker, framed in the RETA for being the sole administrator of a Limited Company, applies for the active retirementpension. When his application is rejected, the worker submits a prior claim, which is partially accepted by the National Social Security Institute (INSS). On the one hand, it recognizes the active retirement pension in an amount of 50% of the regulatory base, but on the other, it rejects the amount of 100%, because (the applicant) does not have hired an employee individually and personally, since the contracting entity is the company.

The worker, dissatisfied, files a lawsuit requesting that his right to receive an active retirement pension with an amount of 100% of his regulatory base be declared.

Article 214 of the General Social Security Law, which includes active retirement as a figure that allows work to be compatible with 50% of the retirement pension, was modified with effect from October 26, 2017, by L 6/2017 of urgent reforms of self-employment. The objective is to extend to 100% the retirement pension that self-employed workers can reconcile with self-employment, when they prove the requirement to have hired at least one employee.

The Social Court nº3 of Oviedo, accepts the claim of the demand considering that the interpretation made by the INSS is restrictive and contrary to the purpose of the rule,which is none other than to facilitate the continuity of businesses run by self-employed who, in turn, provide employment for others.

In addition, art.214.7 LGSS only excludes from the possibility of accessing the active retirement in the event of a job or high office in the public sector,but not to workers compulsorily included in the RETA for exercising the functions of direction and management, which entails the performance of the position of director or administrator.

The judgment estimating the Social Court nº3 of Oviedo is based on the non-binding consultation of the General Directorate of Social Security Regulation (DOGSS) of February 21, 2018, which indicated that self-employed workers whose registration in the RETA is mandatory for performing the position of director or administrator having effective control of the company, and who prove to have concluded a contract of employment for another person acting as employers; they can access the active retirement modality.

However, at a date subsequent to the publication of this judgment, the DGOSS has modified its criterion by pointing out that the compatibility between self-employment and 100% of the retirement pension is not applicable to retirement pensioners included in the RETA due to their status as director, administrator, partner or commoner of companies, as they do not have the status of entrepreneurs.

Active retirement requirements

As regulated by the General Law on Social Security, in article 214, there is the possibility of reconciling work with the receipt of the retirement pension, in the following amounts:

if the activity is carried out as an employed or self-employed person, without having hired any worker: 50%;
if the activity is carried out on a self-employed and it is accredited to have hired at least one employee: 100%.

General requirements for the WORKER

The general requirements that a worker must meet in order to qualify for active retirement are:

access to the retirement pension once the ordinary retirement age has been reached, without taking into account any bonuses or anticipations of the retirement age that may correspond;
that the percentage applicable to the regulatory base of said pension is at least 100%. It is not possible to access with a lower percentage and reach 100% through contributions during active retirement (TS 30-5-17, 24-1-18);
that the development of the activity be carried out within the private sector.

General requirements for the ENTREPRENEUR

On the other hand, the requirements that an employer must meet in order to qualify for active retirement are:

only in the private sector;
prior to compatibility, not have adopted improper termination decisions in the 6 months prior to compatibility,for the coverage of those jobs of the same professional group as those affected by the termination.
maintain during the term of the employment contract of the retirement pensioner, the level of employment existing in it before its start.

In this regard, it is necessary to take into account:

the average daily number of workers registered in the company in the period of the 90 days prior to compatibility is taken as a reference;
the previous obligations to maintain employment are not considered to have been breached when the employment contract is terminated for objective reasons or by disciplinary dismissal when one or the other is declared or recognized as appropriate, nor are the terminations caused by resignation, death, retirement or total, absolute or severe permanent disability of the workers or by the expiration of the agreed time or performance of the work or service that is the subject of the contract.

Active and corporate retirement

If a self-employed person retires once the legal retirement age has been reached, having contributed to the number of years needed to collect 100% of the regulatory base, and hires an employee; you can combine your self-employed activity with the collection of the pension at the rate of 100%.

Although the INSS considers that this measure does not apply to self-employed companies, a recent judgment has allowed a company to benefit from [Juzgado de lo Social nº 3 de Oviedo 17-07-2018] it:

According to the judgment, the regulation that regulates this measure is intended to facilitate the continuity of the businesses of self-employed who in turn provide employment for another person.
Furthermore, this rule does not exclude self-employed companies from this measure.