NOWADAYS, Portugal can be considered as one of the best examples of the probable future situation formost European retired people.
As everybody knows, even if some people pretend not to know it, the social security’s current financing system is unsustainable.The period of workers’ contributions is clearly not long enough to cover the expenses during the retirement time, a time that lasts longer and longer due to a higher life expectancy. In fact, in Switzerland, it isreckoned that people will live 120 years in a near future.
Therefore, as long as our system does not want or is not able to find some other financing sources, the only solution will be the extension of the period of contribution.
The Portuguese Government has tried to tackle this problem by fixing at 65 years the standard retirement age.
This decision affects all the civil servants, a sector that represents 20% of all Portuguese workers, and that plays a key role in the country’s life.
Prior to this new system, and alleging some different reasons (some fair, some others not), a civil servant could retire at 60, and in some specific cases the retirement could take place at 50. Contrary to what happens with the rest of the workers, their received a pension equivalent to the amount of the salary earned in the last month of service. However, in the general system, the retirement pension only reaches 80% of the average wage earned during the last ten years of work.
Protests against this government’s new system have already started. Teachers and nurses have gone on strikes, the army, the police and the civil servants have demonstrated against it, and these last and the judges will probably go on strike.
Since local elections will take place in October, we will not have a solution for the problem before this date. The Government knows that most of the workers consider this standardization something fair and necessary.
But, while we are worried by this complicated situation, we forget about another problem that affects all retired people. The general tax deduction for retired people has gone from 8000 to 3000, which means a considerable rise in the amount of taxes they will have to pay.
This is the current situation but, going a bit further, it is not ridiculous to think that when everyone calms down, retirement age will reach 70 years.
Will it stop there? Besides, bearing in mind the drop or cancellation of co-financing measures regarding drugs and medical services, and the VAT raise from 19% to 21%, it is obvious that those with little means will be the ones who will suffer the most. Unfortunately, retired people are part of this sector.
The moment has come for us, retired people, to ask ourselves some questions:
a) Despite being a big group within society, we are not able to avoid the worsening of our pensions.
b) Despite being the weakest link, is there anything we can do in order to change this situation?
From my point of view, it is possible to use lobbying tactics in order to see the creation, for instance, of a Public Department of Third Age, similar to the one that is already in place for youth.
Those working at the national or European decision-making levels are the ones able to force the governments to pay close attention to third age’s problems.
Fernando Boto
President of Montepio Geral