The Government is preparing a plan to reinforce supplementary pensions in Portugal, with the aim of increasing disposable income in retirement through private savings mechanisms. The initiative comes at a time when the European Commission is asking Member States to promote additional solutions to the public pension system.
According to Notícias ao Minuto, the announcement was made by Finance Minister, Joaquim Miranda Sarmento, at the end of a meeting of European Union Finance Ministers in Brussels, where the European package relating to supplementary pensions was discussed.
The official added that the Executive will wait for the European Commission’s work to be completed before formally presenting the national plan, which is being prepared in conjunction with regulators and financial market agents.
Private savings gain weight
Despite highlighting that the central pillar of Social Security in Portugal continues to be the public system, the minister admitted the need to reinforce the complementary component, of a private and voluntary nature.
According to the same source, the savings rate of Portuguese families has increased significantly since the pandemic. Historically situated between 7% and 8% of disposable income, it is currently around 12% to 13%.
The Government’s intention is to channel these savings into solutions considered more efficient and with greater profitability, contributing to greater financial sustainability in the medium and long term.
What does Brussels propose?
Last November, the European Commission urged EU countries to adapt their pension systems, promoting complementary instruments such as retirement insurance and Retirement Savings Plans, still little used in Portugal.
According to the publication, one of the measures under discussion is the automatic enrollment of workers in supplementary plans, with the possibility of voluntary exit. In this model, companies would make plans available and workers would contribute small percentages of their salary.
Brussels also wants every citizen to be able to consult, in a single system, all their pension rights, including public pensions, professional funds and private plans.
Challenges of the Portuguese system
The Portuguese system faces structural challenges similar to those in other European countries, such as the aging of the population, irregular contributory careers and the prospect of lower future pensions.
According to , the Commission also defends the creation of national pension panels that make it possible to monitor the sustainability of the system and the rate of adherence to complementary plans.
The reform of occupational pension funds, which in Portugal are few and small in size, is also under debate, as well as the simplification of the Pan-European Personal Pension, as an alternative to traditional products.
European proposals will now have to be negotiated and approved by the European Parliament and the Council. In parallel, the Government is preparing its national plan, which could change the way the Portuguese supplement their income when they reach retirement.
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