According to Article 41 of the Spanish Constitution, “The public authorities shall maintain a public social security system for all citizens, guaranteeing sufficient support and social benefits in situations of need, especially in the event of unemployment, and the support and additional benefits shall be free. ”
But before discussing who has to contribute to the system, how much, and what benefits can be claimed, we will provide a brief outline of what the Social Security system is.
A little history
At the end of the 19th century, the Commission on Social Reforms drew up a study of issues relating to the improvement and welfare of the working class. Thus it was that in 1900 the first social security was established, the Accidents at Work Act, and just a few years later the National Institute of Social Insurance was created, which integrated the banks that managed social insurance schemes as they emerged. What is known today as Social Security gradually developed in the course of the 20th century.
What is Social Security?
The Social Security authority is responsible for the affiliation of workers and for collecting the contributions of both workers and employers through the Treasury of the Social Security System (TGSS). Furthermore, the National Institute of Social Security (INSS) recognises and controls entitlement to contributory economic benefits, such as pensions for retirement, permanent incapacity, widowhood, etc., and some non-contributory benefits, such as the Minimum Living Allowance (IMV), etc. It is also responsible for recognising entitlement to healthcare.
Additionally, the Social Marine Institute (ISM) is responsible for managing, administering and recognising entitlement to the benefits of the Special Social Security Scheme for Sea Workers, and for the registration of companies, affiliation and termination of affiliation of workers, and collection and control of contributions, in collaboration with the TGSS.
How the Spanish Social Security system works
As we have already said, the Social Security system is regulated by the Constitution and the revised text of the Social Security Act (Royal Legislative Decree 8/2015).
This state benefit system is based on several fundamental principles:
- Universality: maximum extent of protective coverage
- Intergenerational solidarity: the contributions of active workers finance the benefits currently paid.
- Proportionality: the benefit received will be proportional to the contributions paid into the System.
- Equity and equal rights: regardless of the time and place of residence of the person insured.
- Sufficiency: guarantee and refinement of levels of welfare through appropriate benefits.
- Single Reserve: the State is the sole owner of all the Social Security resources, obligations and benefits.
How is Social Security financed?
Social Security is financed by means of a mixed system into which various funds flow in order to gather the resources necessary to fulfil its obligations.
The most important funds are the Social Security contributions or payments made by both employers and workers, and the contributions made by the State to sustain the system.
Moreover, there are two types of benefits offered:
- Contributory category: In this category, the beneficiary must have paid Social Security contributions for a specific number of years to be eligible to receive the benefit.
- Non-contributory category: This category is more of a universal, care-related type, since the benefit is assigned to all kinds of people, regardless of whether or not they have paid contributions.
These benefits are financed through the funds of the Spanish State Budget. These funds finance healthcare, the complements to minimum pensions and the budget of the Institute for the Elderly and Social Services.
Who is obliged to contribute to Social Security in Spain?
Everyone who works in Spain must be registered in the Social Security system and pay the corresponding contributions. It is necessary to be employed and to make contributions to be covered in the event of illness, injuries and accidents at work, as well as to be eligible for maternity and paternity leave or unemployment benefit.
The self-employed, a case apart
Self-employed workers also pay Social Security contributions, although they do so under a special state regime.
Does everyone make the same contributions?
Yes and no. That is to say, every worker who is registered in the system is obliged to pay contributions. But these contributions are not the same. As we have mentioned, one of the fundamental principles of Spanish Social Security is the principle of proportionality.
The global Social Security rate in Spain is around 35-40%, shared between the worker’s contribution and the contribution made by the company.
It is important to note that the contribution paid by the company is higher than that of the worker, and represents approximately 30% of the salary.
Self-employed workers pay their own contributions and, as a general rule, the percentage is lower.
As a foreigner, can I benefit from this Social Security system?
The answer is yes. In fact, in Spain there are 2,378,437 foreigners affiliated to the system. So, when a foreigner begins to work in Spain, one of the first things they must do is register in the Spanish Social Security system and pay contributions. In this way, they will be eligible for free healthcare, for example.
What benefits does Social Security offer?
The benefits that a worker receives in exchange for making Social Security payments in Spain are the following:
• free Spanish healthcare
• benefits in the event of occupational illness or injury
• maternity and paternity care, and child allowance
• invalidity benefit
• retirement pension
Healthcare benefits in Spain
This is one of the key benefits. For when you contribute to the Social Security system, you have national health coverage.
Healthcare covered by Social Security aims to provide the medical and pharmaceutical services needed to preserve or re-establish the health of its beneficiaries and their capacity to work. The appropriate services are also provided to complement the medical and pharmaceutical benefits, attending, in particular, to the physical rehabilitation necessary to achieve the complete professional recovery of the worker.
There are other situations in which a person is also eligible for healthcare in Spain:
They have lived in Spain since before April 2012 and they earn less than 100,000 euros. You can register for healthcare as a resident in Spain through your local INSS office.
Another option for receiving medical care is to pay for a special public health insurance plan on a monthly basis (special agreement).
Sickness cash benefits in Spain
Known as sick leave. When the worker is unable to work due to sickness, they are entitled to receive a cash benefit.
To be eligible, they must have contributed for a total of 180 days in the last 5 years. This benefit will be offered for a maximum of 365 days (plus 180 additional days, if so recommended by a medical tribunal).
When the worker is on sick leave, they receive 60% of the monthly contribution basis from the fourth day until day 20 and 75% thereafter.
In order to be granted sick leave, the worker must present the employer (or the INSS, if self-employed) with a medical certificate.
Maternity and paternity
Employed workers and some self-employed workers are entitled to paid maternity leave from the date of birth of their child (occasionally before) or from the date of the official resolution authorising adoption or foster care.
Through this benefit, they receive a daily sum corresponding to 100% of the contribution basis of the month prior to the maternity/paternity leave, for 16 continuous weeks.
Invalidity and other benefits in Spain
When a worker has a permanent condition that prevents them from working, they can claim invalidity benefit. The benefits include a pension and rehabilitation. Invalidity benefits are available through the Disability Evaluation Board (EVI).
If the invalidity is occupational in origin, there is no minimum contribution period. On the other hand, if it is not related with work, the person must have contributed to a plan for a specific number of years, depending on their age and the point in time when they became incapacitated.
Retirement and pension
Retirement benefit in the contributory category covers the loss of income faced by a person who, once they have reached pensionable age, stops working as an employed or self-employed worker, bringing their working life to an end, or they reduce their working day and their salary in the legally established terms.
This benefit will vary depending on the number of years they have contributed and the amount they have paid.
Rosclar’s Social Security department assists and advises companies of all kinds and will take full care of any administrative procedure related with Social Security. Shall we talk?