Following the publication of the Implementing Regulation 416/2026 of 27 May, the regulatory framework for flexible retirement has been completely modified, allowing those who have already retired to return to the labour market without losing their retirement pension entirely. The new regulation will come into force on 28 August 2026 and repeals the Implementing Regulation that had been in force since 2002.
Whilst the aim of the new regulation is clear—to make flexible retirement an attractive option—many questions may arise for companies and workers alike regarding the effects the Implementing Regulation will have.
This article therefore aims to explain, in clear and practical terms, the changes and implications for those considering returning to work after retirement, as well as for companies wishing to recruit such talent.
What is flexible retirement?
Flexible retirement is based on an already recognised pension: the individual has retired, either under the standard or early retirement scheme, and, after a period of time, decides to return to work on a part-time basis, receiving a portion of their pension which is reduced in proportion to the hours they work.
It should be noted that this arrangement differs from ‘active retirement’ – which involves waiting a year after retirement to receive part of one’s pension whilst continuing to work, whether full-time or part-time – as well as from ‘partial retirement’, which is designed for those who reduce their working hours whilst continuing to work and without retiring fully. Nor should it be mistaken with deferred retirement, which applies to those who postpone receiving their pension and continue working in exchange for a future increase.
Extension of the compatible working hours range
Until now, in order to combine a pension with part-time work, working hours had to be between 25% and 75% of a full-time worker’s hours. The new Implementing Regulation changes this range: it must now be between 33% and 80%.
This change serves a dual purpose: on the one hand, raising the minimum prevents people from working merely token hours just to claim the benefit, whilst, by raising the maximum, employers have greater scope to make the most of the availability of workers returning to work.
The latest development: flexible retirement finally comes to the self-employed
Until now, flexible retirement was only available to those returning to work as employees. Implementing Regulation 416/2026 extends this option, for the first time, to those resuming self-employment.
However, there is one important condition: only those who have not been registered as self-employed under any Social Security scheme during the three years prior to their retirement date will be able to combine their pension with their new self-employed activity. This is a safeguard designed to prevent abuse, thus requiring a genuine break from work.
In return, the financial benefits are more limited. In this case, only 25% of the pension will be paid, a percentage significantly lower than that which can be achieved whilst working as an employee. The simple explanation is that it is much more difficult to monitor the actual hours a self-employed person devotes to their work, which has led the legislator to be more cautious with this option and to continue giving preference to salaried employment.
Financial incentive for workers who wait before returning to work
The basic rule remains the same: if, for example, you work 60% of full-time hours, the compatible pension is also reduced to 60%. This proportionality already existed. What is new is that an incentive is now provided if the return to work is not immediate.
That is to say, if employment begins for the first time at least six months after the retirement date, the compatible pension is increased on top of the amount previously received, in accordance with the following scale:
| Working hours | Additional increase to the pension |
| From 55% to 80% | 25 % |
| From 33% to 54% | 15 % |
It should be noted that this increase does not apply solely to employees; in the case of the self-employed, the pension will also be increased by 25 %.
This incentive aims to reward a genuine return to the labour market following a period of actual rest, rather than an almost immediate transition between the last day worked and the first day of the new job, for which other schemes already exist, such as active or partial retirement.
Contributions made during flexible retirement no longer increase the pension
Until now, contributions made whilst a person was in flexible retirement did have an effect: upon ceasing work, the pension’s regulatory base was recalculated to include these new contributions, which could increase the final amount.
Under the new regulations, this possibility no longer applies as a general rule, as making contributions whilst in flexible retirement will not increase the pension already awarded or the delay supplement. This change can be seen, to some extent, as a trade-off for the new financial incentive mentioned in the previous point, which replaces that mechanism for increasing the pension.
However, there is one significant exception: those who took early retirement for reasons beyond their control – for example, following a collective redundancy or a dismissal on objective grounds – will be able to benefit from these new contributions when they cease their compatible employment. In such cases, the pension may be recalculated, which could reduce or even eliminate the reduction coefficients that were originally applied due to retirement before the standard retirement age.
An obligation to bear in mind: giving notice before starting work
Pensioners must notify the INSS in advance of the start of any employment or self-employment, as well as any change in working hours or the cessation of such activity.
Failure to do so has serious consequences: the pension will be deemed to have been wrongfully received from the date on which the activity actually began, with an obligation to repay the overpayment, without prejudice to any penalties that may be imposed under the Law on Offences and Penalties in the Social Sphere (LISOS).
What can be combined with flexible retirement and what is completely incompatible?
- During the period of compatibility, you are not entitled to supplements for pensions below the minimum level.
- It is also incompatible with a permanent disability pension arising from work carried out after retirement.
- You retain your status as a pensioner for the purposes of the public health system at all times.
- As regards the financial supplement for deferring retirement (Article 210.2 of the General Social Security Act): those who receive it as an additional percentage may opt for flexible retirement, although the supplement will be suspended for the duration of the period of compatibility and will be reinstated once they stop working. Those who chose to receive it as a lump sum, or via the mixed option, will not be eligible for flexible retirement.
- Temporary incapacity and benefits for childbirth and childcare are compatible with the pension.
Common rules set out in the legislation
- If, after leaving a compatible job, a person becomes temporarily incapacitated, this is incompatible with the retirement pension from that point onwards, as only the pension will be paid.
- To fulfil the required qualifying periods, only contributions made after the date on which the pension became payable will be taken into account.
- If the person dies whilst in this situation, their beneficiaries may choose to have the death and survivor’s benefits calculated on the basis of whether the person was in active employment or a pensioner at the time.
Conclusions
It is clear that the reform seeks, above all, to make flexible retirement more attractive, given that until now it has been less popular than other alternatives. For those considering retiring and, at a later date, returning to work, this means a wider range of options (including, for the first time, self-employment) and a clear financial ‘reward’ for waiting before returning to work.
For businesses, this opens the door to recruiting more senior professionals who have already retired, either as employees working up to 80% of full-time hours or as external consultants; however, it is important to pay attention to the formal requirements – particularly the need to notify Social Security in advance – before formalising any arrangement with a person in this situation.
As is always the case with Social Security matters, each case has its own particularities; therefore, before making a decision, it is advisable to analyse the specific situation with specialist advice.
