Many Portuguese people with long-standing contributory careers may be covered by a pension calculation scheme that is not always known: the so-called P1/P2. This mechanism applies to beneficiaries enrolled in Social Security until December 31, 2001 and may, in some cases, result in a more favorable retirement.
The regime is provided for in , which regulates protection in the event of disability and old age under the general Social Security regime. The rule is also explained in the Social Security Old-Age Pension Practical Guide.
In practice, this calculation does not represent an automatic increase or a new bonus. This is a formula used to determine the retirement of those who were already registered with the INSS before 2002.
Who can be covered?
The P1/P2 regime applies to beneficiaries enrolled in Social Security until December 31, 2001 and whose pension begins after January 1, 2017.
In these cases, the statutory pension can be calculated through a weighted average between two installments: P1, based on old rules, and P2, calculated according to more recent rules.
The final value depends on the weight of years of contributory career before and after 2002. Therefore, two people with the same total number of years of deductions may have different results, depending on the career distribution and declared salaries.
How does P1/P2 work?
The formula combines two parts of the pension. P1 takes into account the 10 best years of remuneration within the last 15 years of the contributory career, following the old calculation logic.
P2 looks at the contributory career in a broader way. This portion is based on the revalued annual remuneration for the entire career, up to the applicable legal limit.
It is precisely this difference that can make the regime favorable in some cases. Those who had higher salaries at a specific stage of their career can benefit from the way the P1 portion is calculated.
The calculation depends on each person’s career
Despite this, there is no guarantee that the P1/P2 scheme will always result in a higher pension. The impact depends on the wages recorded, the years of contribution and how the career was divided before and after 2002.
The law also provides for an important safeguard. If the calculation made by the general rules is more favorable to the beneficiary, that should be the value to be considered.
In other words, the system seeks to prevent the application of the P1/P2 formula from harming those who would be entitled to a higher pension through the normal calculation.
Old salaries are updated
Before the pension is calculated, the earnings recorded throughout the career are revalued. This update serves to bring old salaries closer to the current value, according to coefficients fixed annually.
For pensions starting in 2026, the revaluation coefficients were defined by Ordinance No. 88/2026/1, published in February and applicable to pensions starting during this year.
This step is important because the value of the reform does not just result from nominal salaries paid in the past. Updating salaries can directly influence the final calculation.
There are limits to take into account
Portion P1 has its own limits. One of the legal ceilings is related to the Social Support Index, known as IAS.
In 2026, the IAS value is 537.13 euros, in accordance with Ordinance No. 480-A/2025/1. This value is used as a reference in various social supports and benefits.
Still, threshold rules don’t simply apply in all cases. The law provides for exceptions, namely when the comparison between P1 and P2 leads to another, more favorable result.
Why can you give a higher pension?
The regime can be advantageous for those who have had a long career and higher salaries in certain periods. As P1 considers the best years within a specific range, it may favor careers with higher pay at the end.
P2 dilutes the calculation over a broader part of the contributory career, which may be less favorable when there were many years with lower salaries.
Therefore, the real effect can only be confirmed through the contribution history of each beneficiary. It is not enough to have discounted before 2002 to guarantee a higher value.
What should you do before requesting retirement?
Anyone who is approaching retirement age should consult the contribution career in Previdência Direta and check whether all years of deductions are recorded correctly.
Gaps, lost wages or unvalidated periods can affect the pension calculation. Whenever there are errors, the ideal is to try to correct them before filing for retirement.
It may also be useful to use the Social Security simulator to get an estimate of the likely value of the pension. Still, the simulation does not replace the INSS’s final decision.
Long careers also count
In addition to the P1/P2 calculation, there is also the personal pension access age mechanism. This rule may allow for a reduction in the normal retirement access age for those with long contributory careers.
According to current rules, the age can be reduced by four months for each year of a career that exceeds 40 years, although access to the pension is not allowed before the age of 60.
In essence, anyone who collected Social Security before December 31, 2001 must confirm whether the P1/P2 regime was considered in the retirement calculation. In some cases, it may make a difference in the final value of the retirement, but it all depends on the contributory career recorded.
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