Pensions from the Social Security and the Caixa Geral de Aposentação (CGA) are expected to rise in 2023 above what the government has set in a law. The lowest pensions, up to 957.4 euros, equivalent to twice the Social Support Index (IAS) which will be set at 478.7 euros, could increase by 5% instead of 4.43%, according to Dinheiro Vivo accounts, as defined by the Executive. the rules for calculating installments and on the most recent inflation estimate for this year, which the European Commission believes should be 8%, which is 0.6 point above the government’s projection of 7.4%. It means a maximum increase of up to 50 euros, ie between 2 and 8 euros more than expected for reforms in this range of values.
The next levels of reform will also see a change from what was approved by the executive in October. Pensions between EUR 957.4 (twice the IAS) and EUR 2872.2 (six times the IAS) are expected to rise above 4.07%. As well as the reforms between 2872.2 euros and 5,744.4 euros (12 times the IAS), which will have an update of more than 3.53%, due to higher inflation than the government’s forecast.
But this change in the updates will only be possible because the PS has submitted a proposal to adjust the national budget for 2023, which gives the management room to further increase pensions to absorb higher inflation. According to the socialists’ project, published on the parliament’s website on Tuesday, the government “may, by means of a regulation, update pensions and other benefits above the percentages provided for in Law No. 19/2022 of October 21, depending on the evolution of CPI (Consumer Price Index) and GDP growth”. This proposal embodies repeated statements by Finance Minister Fernando Medina and Labor Minister Ana Mendes Godinho that the government would be willing to increase pensioners further if inflation exceeded the government’s forecast of 7.4%.
The European Commission has revised upward inflation for Portugal to 8% in 2022, after setting it at 10.1% in October.
It will be the annual average evolution of the inflation rate, calculated in November by the National Institute of Statistics (INE), which will dictate the new update of pensions. Last Friday, however, the European Commission revised inflation for Portugal upwards to 8%, after setting it at 10.1% in October, according to INE. Regarding the evolution of the economy, the community manager now points to a growth of 6.6% this year, above the 6.5% estimated by the government of António Costa. In 2021, GDP increased by 4.9%.
The annual GDP average of the last two years and the inflation calculated in November are the two variables taken into account for the increase in the number of pensioners. However, the government decided to change the rules by halving the calculation base when in October it awarded a bonus of plus half a pension for retirements up to €5,744.4. For example, in 2023, the more than 2.7 million social security and CGA retirees will not be entitled to an increase between 8% and 7.1%, as stated in the original formula, but will receive more between 4.43% and 3.53%, because the executive decided to take this year’s pension supplement into account for the general calculation of next year’s pension updates. This means that from 2023 they will receive a discount on the calculation basis for the regular update of the reforms.
Even if the government increases the reform update by a few tenths now, it will not be enough to offset the reduction pensioners will suffer in the future. In 2024, social security pensioners, with an average pension of 501.77 euros, lose 252 euros for the whole year, or 18 euros per month, and CGA beneficiaries, with an average pension of 1,341.99 euros, receive a reduction of 672 euros per year or 48 euros per month.
Salomé Pinto is a journalist for Dinheiro Vivo
Source: DN
