Benefit Calculation Base: What It Is and How Benefits Are Calculated

The benefit calculation base (base reguladora) is a yardstick that Social Security uses as a reference to calculate the amount of the various benefits paid to workers. Not all workers receive the same amount in the event of retirement or temporary or permanent incapacity. This benefit calculation base is therefore needed to establish what each citizen is entitled to.

Although other factors also play a part in determining the final amount of a pension, whatever its type, all of them depend on a percentage of the benefit calculation base. Even though the case, the pension, and the benefit differ each time, the benefit calculation base is a criterion that governs every case.

Are the benefit calculation base and the contribution base the same thing?

The answer is no. They must not be confused under any circumstances. However, they are closely related, since both affect the final amount you will receive when you apply for a Social Security benefit.

• A contribution base (base de cotización) is applied to a worker's monthly payslip, and a percentage of it must be paid by both the worker and the employer as a levy to Social Security. Maximum and minimum amounts are set each year according to professional categories, and these are used to calculate what the worker and the company must contribute.

• To understand specific cases later on, it is also important to note that each payslip must show two separate values that form part of the contribution bases: the common contingencies base and the occupational contingencies base (the same as the former, but with overtime added).

• The benefit calculation base is linked to the contribution bases a worker has paid in over his or her working life, and it is used to determine the benefits the worker is entitled to receive.

That said, the cash benefit to which each worker is entitled depends on the Social Security contribution bases of the preceding years and on the type of benefit the worker applies for.

Benefit calculation base depending on the case

To calculate the cash benefit to which each worker is entitled, the first step is to take into account the Social Security contribution bases for the years preceding retirement. The benefit calculation base is then calculated. Until 2013, the benefit calculation base for the retirement pension was calculated using the worker's contribution bases for the last 15 years, a period that increases by one year each year. Accordingly, from 2022 onward the benefit calculation base will be determined on the basis of 25 years of the worker's contributions; that amount will be updated in line with the Consumer Price Index (CPI), except for the bases of the last 2 years.

Benefit calculation base for retirement

A series of steps must be followed to calculate the benefit calculation base that will govern a retirement benefit.

• First, determine the contribution bases.

• Second, determine the reference period. As noted above, the relevant legislation has changed, and the benefit calculation base is now calculated using the contribution bases for the last 25 years. However, this will apply from 2022, as the transition to the new system is still under way: in 2021 the calculation still takes into account the last 24 years.

• The third step is to update the contribution bases in line with the CPI. The period used runs from the start of retirement back 25 years, excluding the last two years, that is, the most recent ones.

• Fourth, add up all the contribution bases for each of the months. This year, 2021, it will still be 288 months, corresponding to 24 years. From next year, it will be 300 months, corresponding to 25 years.

• In the final step, the benefit calculation base is obtained by dividing the total sum of all those contribution bases by the applicable divisor: in 2021, with 288 months and 24 years, the divisor is 336; in 2022, with 300 months and 25 years, the divisor will be 350.

Benefit calculation base for temporary incapacity

To calculate the benefit calculation base in the event of temporary incapacity, there are three possible scenarios and three methods of calculation:

• If the worker is paid a monthly salary, the result is obtained by dividing the contribution base for the month before the sick leave by 30 days.

• If the worker is paid a daily wage, the result is obtained by dividing the contribution base for the previous month by the number of days in that month.

• If the worker goes on sick leave after starting work at the company, the benefit calculation base will be the contribution base for the month divided by the days for which contributions were paid in that same month.

Benefit calculation base for permanent incapacity

The permanent incapacity benefit is intended for persons under 60 who have suffered an illness or accident that leaves them unable to carry out a professional activity for the rest of their lives.

Accordingly, the cause of the permanent incapacity is decisive in calculating the benefit calculation base (common illness, occupational accident or occupational disease, or non-occupational accident).

There are also four distinct degrees of permanent incapacity: partial, total, absolute, and severe disability (gran invalidez). Each is calculated differently.

Benefit calculation base for unemployment

In this case, the contribution bases for the last six months, or 180 days, during which the worker was registered with Social Security must be counted. Social Security also counts the calendar days of each month. In essence, the higher the worker's contributions in recent months, the higher his or her unemployment benefit will be.

Benefit calculation base for maternity or paternity

The benefit calculation base for maternity benefit and paternity benefit is calculated in the same way as the benefit calculation base for temporary incapacity benefit arising from common contingencies, that is, by dividing the contribution base for the last month by the days for which contributions were paid in that month.

Benefit calculation base for self-employed workers

For self-employed workers, the rules on benefit calculation bases are the same as for other types of workers. Therefore, to calculate a self-employed worker's benefit calculation base, we must look at the type of benefit.