As a general rule, retirement is incompatible with any other work, whether as an employee or self-employed, and therefore no Social Security contributions are required under any such scheme.
For company directors, however, the exceptions set out below apply.
Compatibility of retirement with holding the position of director of a company:
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Active director:
- NOT compatible with an ordinary retirement pension, but compatible with active retirement.
- A director who, in addition to performing their directorial duties, plays an active role in the company (signing contracts, negotiating with banks, hiring and dismissing staff, etc.)
- Is required to make Social Security contributions.
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director without effective control of the company
- A director who is active but does not have effective control of the company and receives no remuneration (effective control is deemed to exist where the director holds at least 25% of the share capital).
- IS compatible with the retirement pension.
- No obligation to make Social Security contributions.
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Passive director:
- IS compatible to hold the position of director while retired, provided the role is strictly and exclusively limited to administrative functions (convening shareholders' meetings, preparing and submitting annual accounts for approval, and overseeing their management, etc.).
- No obligation to make Social Security contributions in this scenario.
- Recommended: appoint and grant powers of attorney to a general manager to handle day-to-day operations, in order to demonstrate that the director is genuinely removed from the management of the company.
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Active retirement
- IS compatible with holding an active, remunerated position as director of the company
- Entitlement to 50% of the retirement pension applies, both for self-employed workers and those under the general scheme.
- There is an obligation to contribute at a reduced rate.
- Requirements:
- Having contributed for the period required to receive 100% of the regulatory base
- Having reached the statutory retirement age.
- The company must not have carried out any unfair dismissals of employees in managerial roles in the preceding 6 months.
- The company must maintain its current level of employment.
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Social Security contributions and classification for the director
Below are the correct options for classification under the appropriate Social Security contribution scheme:
