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Index of documents > Euromeetings Magazine > Euromeetings Number 14



PENSIONERS AND PENSIONS IN PORTUGAL – WHAT FUTURE?

 

40 years ago, the average life span of a Portuguese citizen, from the time of birth, was less than 64 years old.  In 2007, the life span was 78.2 years. These numbers are based on the studies from the INE- Instituto Nacional de Estadística (National Statistics Institute) – Table 1.

Furthermore, according to the INE, the curves in the proportion to the youth and older people (>65 years) reversed its relative weight in 2001. In 2050, it is expected that the youth will be only 13.1% of the population, while the elderly will represent 31.8% - Table 2.

In order to understand a little better the present situation and perspective shady spots for our future pension, we should also remember two things, throughout in a period of 25 years:

1.      Generally, the pension system was created in the last part of the 60´s last century (until then, only a few state officials had the right to a retirement pension and the majority of the rural workers did not have practically anything).

2.      At the beginning of the 90´s, as a way to modernize businesses and cut down “salary” costs, the government encouraged the so-called “anticipated retirement”, the same for the Public Administration.  As result of this policy, thousands of employees, some of them under 50 years of age, retired after having worked less than 30 years in their life.  From 1990 to 2003, Portugal began spending almost half of the percentage of their PIB in the pension payments (from 5.4% to 10.5%, according to the OCDE).

Keeping in mind these resources, what is really happening is that the present situation of the pension system in Portugal (there are two systems- one for civil servants and the other for the workers of the private sector), is what we call the pre-rupture.

Generally, the population has a great life-span, which is good.  Without a doubt, as the number of employees tends to decrease, the support of the retirement system diminishes ( it is said in Portugal that shortly there will be only one active worker for every retired person).

 

The systems also feel forced to finance a great number of citizens that began to contribute for them in 1969 or, like in the 90´s, interrupted their quotation when they still had not reached the minimal reasonable work time in order to be able to enjoy a comfortable retirement.

In addition to the workers, it is also clear that the government leaders are worried about the situation.  Recently, the so-called “supportive factor” was introduced, that makes the citizen have a longer work life (now 65 years, being penalized 5.00% of the pension for each year that they do not reach that age) or that they carry out quotations, contributions of high worth to the founder in  order to finance their own “retirement savings plan”.

On the other hand, the retirement pension amount is now 90% of the earned salary (the last part in the case for civil servants or the average work years for the rest of the workers). The studies done by the OCDE suggest that, in the mid-term, this percentage can decrease until 50% of the present value.

Therefore, the Portuguese pension systems are scanted from the base and, with the social perspective drawn, the tendency is going to get even worse.

Honestly, we believe that with our politicians´ intelligence, the strength of the present and future generations, and also the wisdom of almost a thousand years of history, Portugal can overcome the difficulties that are not only ours but also for other members of the European Union, of which our country is also an active and committed member.

 

Cândido Vintém

President of ANAC - Portugal