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V1447-20 18 May 2020 · SG de Tributación de las Operaciones Financieras Criterion in force
IRPF · contingencia de jubilación

Retirement contingency for pension plans occurs when full pension payments are reinstated

A consultant sought clarification on when the retirement contingency is deemed to have occurred for the purpose of applying a 40% reduction to their pension plan, given they were alternating between active retirement and employment. The Directorate-General for Tax (DGT) ruled that, if pension plan benefits are not drawn during active retirement, the contingency occurs when the right to receive full Social Security pension payments is reinstated.

The question raised

Deadline for applying the 40 percent reduction to the retirement benefit to be received from the pension plan.

The DGT's ruling

The retirement contingency occurs, as a general rule, upon effectively accessing retirement. If the collection of the plan benefit is not initiated while in active retirement, the contingency shall be understood to occur at the moment the full receipt of the Social Security pension (or the amount that would have been due) is reinstated. This determines the period for applying the transitional regime and the 40% reduction.

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