With inflation rampant, which the government estimates at 7.4% this year, although the Finance Council is pointing at 7.8%, pensioners on benefits of 650 euros gross will have to live each month on just 5.58 euros more on pocket, according to calculations by Dinheiro Vivo based on simulations by Ernest & Young (E&Y) for 2023. This means that about 1.6 million retirees, i.e. more than half of those who will benefit from an upgrade between 4.43% and 3.53% in 2023, a net monthly increase of 0.8%. Plus 5.58 euros.
E&Y’s simulations already take into account the update of the reforms between 4.43% and 3.53%, the increase in income tax brackets by 5.1% and the reduction of the minimum subsistence allowing more liquidity at the end of the year. the month. If we analyze the different pay levels, it can be concluded that the lowest pensions are penalized the most.
A retired widower with a gross benefit of 650 euros receives only 78.13 euros more net per year or about six euros per month, while a pensioner with a monthly salary of 1500 euros is entitled to an annual net increase of 216.52 euros or 15 .46 euros per month. In the first case, and because the pension is less than 957.40 euros (twice the Social Support Index, which will be set at 478.7 euros in 2023), the gross update will be the highest, 4.43%, even so far below the 8% that, in the normal application of the formula to which the pensioner would be entitled. In the second situation, the increase will be 4.07% as the compensation is between EUR 957.40 (two IAS) and EUR 2872.20 (six IAS). Although the update is lower, the net increase is higher compared to a pensioner with a benefit of 650 euros. Payments above 2872.20 euros receive an update of 3.53%.
From a certain income level, there is no room for slaying or withholding for the minimum subsistence effect, so the net gains begin to slow down as the salary level rises. For example, a couple of pensioners with a pension of 760 euros per taxpayer receive an annual increase of 562.62 euros or 40.40 gross per month. A married couple with a gross pension of 1500 euros per holder will see the net benefit increase in the year 2023 as a whole by 433.03 euros, i.e. they have 30.93 euros more at the end of the month.
In the proposal for the National Budget 2023 (OE2023), the government states that this increase, between 4.43% and 3.53%, and the bonus of more pension, for benefits up to 5318.4 euros, guarantee that pensioners will not receive any benefits in the coming years. have more loss of purchasing power. year. “In the combination of these two measures, lower-income retirees will have an 8% increase above expected inflation,” the document reads.
What is certain is that the government has successively invoked the risk of the sustainability of social security not to carry out updates between 8% and 7.1%, in line with inflation, and according to the existing formula. However, the SO2023 proposal shows that the social security system will have a budget surplus of 3.1 billion next year and a buffer of 34.3 billion from the Social Security Financial Stabilization Fund (FEFSS) that allows to cover deficits until 2060, eliminating the government’s argument that increases between 8% and 7.1% would jeopardize the health of Social Security accounts.
In September, the government issued a document predicting that the FEFSS would begin to decline in the 2040s until ending in 2050. But the report accompanying the proposed state budget for 2023 shows a very different reality: not only is the pillow not extinguished because it should reach 2060, boosted by 34.3 billion euros, 7.8 billion more than the forecast for 2023.
To strengthen the FEFSS, “an intrinsic annual return of 4.0% over time has been assumed from 2024,” the Executive justifies in OE2023’s proposal. The government starts from the “assumption that this fund will be fed by the social security balances, as long as they exist, and by the transfers resulting from the addition to the municipal real estate tax, the part of the corporate tax and the solidarity contribution Extra on the Sector Bank officer”. “It is estimated that the fund will not run out until the end of the projection” 2060, the OE2023 report on the sustainability of social security indicates.
As for the social security system, i.e. the current account that guarantees the payment of the various social benefits, the document points to a surplus of 3.1 billion in 2023, which is largely due to the low unemployment rate that “is the growth of income from contributions and contributions of the order of 5.8% compared to the implementation forecast for 2022, of 10.2% compared to the state budget for 2022,” according to OE2023’s proposal.
At present, the report is in line with what was projected by the Ministry of Labor in September, which revealed a deterioration in the pension system’s budget balance, which fell from 3.1 billion euros in 2023 to 471 million euros in 2030. reach deficits in the next decade: -2.2 billion in 2040; -2.7 billion in 2050; and -1.3 billion in 2060.
“In the projection, the first negative balances of the pension system are expected in the early 2030s, and could reach negative values of up to 0.9% of GDP by the mid-2040s,” according to the OE2023 proposal.
Salomé Pinto is a journalist for Dinheiro Vivo
Source: DN
