The Portuguese repaid 887.3 million euros from pension savings plans (PPR) in the first nine months of this year, 312.5 million more compared to the same period in 2022, according to data from the Supervisory Authority for Insurance and Insurance Funds. ). It was a 54% increase at a time when families can use these tools to cope with the rise in the cost of living and the increase in interest rates, without any penalty. Although the regulator’s data does not reveal the reasons for the lifting of the PPR, all indications are that the escalation of the Euribor and the rise in inflation will have driven this growth in repayments.
From June to the end of 2023, savers can anticipate the repayment of PPR to repay the home loan up to a limit of 5,765.16 euros (12 times the Social Support Index set this year at 480.43 euros). This exceptional measure, launched this summer, joins two others in force since October 2022, which were also created to provide families with more financial assistance. At the time, the government determined that savers could withdraw an amount equal to the IAS from the PPR each month, as long as the plan was subscribed before September 30, 2022. In this case, which is in force until December 31, it is not necessary to justify the reason for the rescue. And the possibility of repaying all or part of the total value of the PPR was also given if the destination was the payment of the installments of the debt incurred to purchase the house.
These first two exceptional measures immediately had an impact in the last quarter of 2022, when 227.2 million euros were raised, an increase of 16% compared to the second quarter of that year. However, this year there is an acceleration in the race for repayments, with the three conditions set by the government for the withdrawal of capital from PPRs being cumulative, that is, the saver has access to savings to cover any monthly expenses, up to a maximum limit of 480.43 euros, to pay off the debt on the home loan and also to pay the credit terms.
PPRs are a savings instrument, the origin of which lies in saving to guarantee a supplement to the pension. In a normal situation, they can only be exchanged without penalty due to old-age pension or being over 60 years old, long-term unemployment and serious illness. However, this increase in the value of repayments, which takes place at a time when there are three exceptional measures and liquidity crises in households, indicates that this value will be used to respond to difficulties in paying mortgages. This week, the CEO of Millennium BCP revealed that “there was a relevant group of families using their savings to cover the cost of mortgage loans”. BCP numbered about four thousand. António Ribeiro, economist at Deco Proteste, has the same perception: “This year there are a significant number of repayments.”
The PPR figures provide yet another sign of the difficulties the Portuguese are facing. PPR production, that is, the amount invested in these products, also fell in the first nine months of this year. Between January and September, 714.5 million euros were raised, 34% less than in the same period in 2022.
Transformed
The use of PPR rescue measures to respond to periods of crisis is not new. It was already used during the pandemic and even after the Troika. But these exceptions have distorted the product, argues António Ribeiro. “The PPR is a long-term saving, which is distorted and serves other purposes,” while it is predictable that “in Portugal within ten years pensions will be reduced by up to 50%,” he points out. In this context, “it is important that people start saving and planning” for when they reach retirement age. To the economist, these government-created measures do not provide “guidance or incentive.” As he emphasizes, “these three measures, which are cumulative, allow me to use up my savings without tax penalties.”
According to him, it is necessary to encourage people to create a pension supplement and to this end he defends the increase of the IRS deduction or the creation of a specific category for PPR. Currently, the IRS integrates deductions for these instruments into the pie, including health care, education, or household expenses. The saver can even enter the deductible amount without integrating the PPR, you know. António Ribeiro emphasizes that it is “necessary to encourage savings for the future”.
Sónia Santos Pereira is a journalist for Dinheiro Vivo
Source: DN
