After five months, the government finally acknowledged that from 2024, pensioners would be cut by almost 50% in the annual benefit update, as it deducted the half-retirement bonus granted in October from the regular evolution. To compensate for this future loss, the executive branch approved this Monday in an extraordinary Council of Ministers an interim increase of 3.57% that will be paid in July to all pensions up to EUR 5765.16 gross per month, which will increase to 206 euros. euros, according to calculations by Dinheiro Vivo.
“If we add this increase to the increase since January, pensioners will already have their pension updated compared to December 2022,” said Prime Minister António Costa during the briefing of the Council of Ministers. That is, “for the year there will be no loss for retirees, because the pension will be updated so that” the value of the pension will already be the value that would have resulted from the Basic Law of Social Security “, he stressed .
So to this year’s increases, between 4.83% and 3.89%, will be added 3.57%, the sum of which will result in the expected update of between 8.4% and 7.46%. This means that the calculation basis for increasing the allowances will be reset in 2024, without penalties.
View the simulations for the three levels
By analyzing the three pension update scales and also the average amounts paid in the private sector and in the civil service, the DV reveals the impact of the additional 3.57% increase in the pockets of the approximately 2.7 million pensioners of the social security system. security and social security Caixa Geral de Aposentação.
In the first level, up to 960.86 euros, which corresponds to a maximum of 2 times the Social Support Index (IAS) which is 480.43 euros, the update applied at the beginning of the year was 4.83%, while the Should have been 8.4% according to the formula of the Social Security Basic Law. If you add in the extra 3.57%, the original calculation is fully fulfilled. In this case, for example, the minimum social security benefits are included, of 291.48 euros, granted to those who have less than 15 years of contributing career. These pensions increase by EUR 10.41 to EUR 301.89. At the limit of this level, those who receive EUR 960.86 are entitled to an increase of EUR 34.3, representing a reform of EUR 995.16.
In the second update level, which includes values above 960.86 euros (2 IAS) and up to 2882.58 euros (6 IAS), the increase attributed to the beginning of the year was 4.49% instead of the predicted 8 .06%. If you add the extra increase to that, then a pension of EUR 2,882.58 will increase from EUR 102.91 to EUR 2,985.49.
At the third level, between 2882.58 euros (6 IAS) and 5765.16 euros (12 IAS), the update amounted to 3.89% instead of the 7.46% resulting from the calculation formula. In this case, a pensioner with a benefit of EUR 5765.16, after adding the interim increase of 3.57%, is entitled to an increase of EUR 205.82, resulting in a total of EUR 5 970.98.
As for the value of the average social security benefit, which was set at €508.63 according to the latest data made available by the government, the increase will be €18.16, resulting in a pension of €526.79. In the government, the average pension, which amounts to 1538 euros, yields 54.91 euros, which results in a pension of 1592.91 euros.
The measure aims to neutralize the reduction in the calculation basis via the supplement paid in October. It will have an additional cost of 580 million in 2023 and 1 billion in the following years.
The measure has an additional cost for the state treasury of 580 million euros in 2023 and 1 billion euros for the years after that.
Those who retire in 2022 will also receive
The law allows update of pensions only to those who retired more than a year ago. That is, until 31 December 2021, with new pensions awarded in 2022 excluded from the annual increase. According to DV accounts, about 11,000 retirees will be in this situation. A month ago, Labor Minister Ana Mendes Godinho rejected any legislative change to include these beneficiaries. However, the government has decided to make an exception to this and will also pay the interim increase to these pensioners. “There is a rule that the annual update does not apply for the first year, but this 3.57% will be applied to all pensions up to 12 IAS (5765.16 euros),” the official announced during the briefing of the Council of Ministers .
Calculation formula does not change
At a time when the government is waiting for the conclusions of the Social Security Sustainability Monitoring Commission (CASSS) and when a working group was set up to review the pension calculation, António Costa guaranteed that the formula will not change next year: “Not before 2024. The working group exists to address the issue of social security sustainability, to study the diversification of social security funding sources and also to be able to look at the formula. But it is not for 2024”.
Still, and despite ruling out changes in 2024, the Prime Minister admits that the issue will be addressed by the CASSS. The calculation included in the law takes into account the average growth of GDP over the last two years and the average annual inflation of the previous year. It should be recalled that the Secretary of State for Social Security, Gabriel Bastos, has already stated that the government is considering a model that is less sensitive to inflation, which implies that it could extend the number of years of these two indicators for pension calculation.
The announced measures coincide with the flexibility that the board has introduced in the Stability Program 2023-2027. During the presentation of the document, Finance Minister Fernando Medina announced that government accounts had room to absorb new support given the 2023 forecast of a deficit to remain at 0.4% and GDP growth of 1.8%, five tenths above estimate.
Similarly, the good health of the Social Security Financial Stabilization Fund (FEFSS), which serves as a buffer for paying pensions, was also decisive in the government’s decision-making. The Secretary of Labor revealed that “there is an increase in the Social Security balance” of the FEFSS. So “the first negative balances are postponed to the next decade, to 2033, including this interim increase and the basis of the 2024 update”. In other words, the Social Security pension fund “managed to gain 17 years of life”. “In 2015, the prediction is that it would not last until the end of the decade, now it appears that the fund will reach 2060 and with a balance of EUR 48 billion, which is the best sign we can give to the new generations about the strengthening of the system,” the official underlined.
Source: DN
