The government could comply with the formula for updating pensions in 2023, which would yield increases between 7.1% and 8% and not between 3.53% and 4.43% as stated in the proposed government budget for 2023, without harming the sustainability of social security. The conclusion is the study coordinated by ISCTE-IUL professor and former Socialist Secretary of State, Paulo Pedroso, on “Sustainability, diversification of funding sources and the challenge of professional regimes in Portugal”, presented this Friday in Coimbra on the occasion of the 44th of UGT birthday.
Contrary to forecasts of the past 25 years, “there is no scenario of a social security system bankruptcy, but a protracted deficit of 1% of GDP between 2040 and 2060 that the Financial Stabilization Fund of Social Security (FEFSS) will be able to cope with.” cover”, Paulo Pedroso revealed to Dinheiro Vivo. He added: “For the first time, it is said that the fund, which serves as a reserve to pay out pensions, is not running out.” In fact, and according to the report of the 2023 state budget proposal, the FEFSS will reach 2060 with a surplus of 34.3 billion euros, 7.8 billion euros more compared to the 26.5 billion registered next year . In contrast, the balance of the pension system for 2023 is 3.1 billion euros and is expected to reach the first negative result in 2032, with pension increases between 3.53% and 4.43%. The deficit would come two years earlier, in 2030, if these social benefits were updated between 7.1% and 8%.
The positive evolution of social contributions has contributed fundamentally to the good performance of social security sustainability, due to the fall in unemployment and wages, which now weigh 9.3% of GDP, while they corresponded in 2022 with only 6% of GDP, declared the former Secretary of State for Employment and Education of the two socialist governments of António Guterres.
Based on these conclusions, Pedroso states that “the study indicates that there would be scope to comply with the pension update law in 2023,” which takes into account average GDP growth over the past two years and verified inflation, which should be expected this year. reach 7.4%, in the executive branch’s forecasts. In other words, “the reduction of pensions “was not a question of the sustainability of social security”, he emphasizes. It is recalled that the government has decided to halve the amount foreseen for the increase in the number of pensioners by monthly installments of up to EUR 5318.4 as a counterpart to the supplementary half-pension supplement paid in October According to the director’s statement, this bonus, added to the increases between 3.53% and 4.43%, would be the update provided for by law However, this means that from 2024 the starting point for future increases will be lower than expected, ie retirees will always lose unless compensated.
In the personal opinion of Paulo Pedroso, “The executive has decided to change the update and now supplement the reform to ensure that it does not have a deficit this year that is lower than the estimated 1.9%, which bad for public opinion, but also to ensure that, in a year of uncertainty and a strong economic slowdown like 2023, it succeeds in meeting the 0.9% deficit target”. “It was more a matter of keeping public finances under control,” he defends.
In order to diversify funding sources, a 5% levy is proposed on automatic and intelligent communication between Internet devices.
Despite the most optimistic projections regarding the sustainability of social security, the work coordinated by Paulo Pedroso emphasizes that the goal of the FEFSS is to guarantee the payment of up to two years of pensions and until the first half of 2022 only had provisions for about a year and Midle. Hence the need to diversify social security funding sources. At the moment, the study proposes to introduce a 5% tax on automatic and intelligent communication between Internet devices, the so-called “Internet of Things”. This new tax can be applied to the cost of smart water, electricity and water meters, smart irrigation equipment or security systems. Paulo Pedroso illustrates that, “in the case of smart electricity meters, the 5% fee will be collected by telecommunications operators and paid by EDP, Galp or any other light supplier”. “If the average cost to the accountant is five euros, then the tax is 0.25 euros per month,” he predicts.
When the application of this rate was at cruising speed, from 2032, it could represent 0.2% to 0.25% of GDP, about 460 million euros will strengthen the FEFSS, the ISCTE professor estimates. This reserve fund currently has seven sources of funding: assets from the previous year’s pension system; funds from the sale of social security housing estate; 2% to 4% of the Single Social Tax that has not been transferred in recent years; in addition to the contribution of the banking sector; additional to IMI; part of the IRC; and income from the aggregation of the IRS.
Salomé Pinto is a journalist for Dinheiro Vivo
Source: DN
