The update of the pensions according to the automatic update and the resulting increases between 7.1% and 8% from 2023 would bring the first negative balances of the pension system to the end of the 2020s.
“The first negative balances of the social security system could be brought forward to the end of the 2020s and could reach negative values of up to 1.0% of GDP [Produto Interno Bruto] in the late 2030s and the fund is estimated to run out in the early first half of the 2040s”according to the Strategy and Planning Bureau (GEP) of the Ministry of Labor and Social Security.
The information is contained in a document sent to the deputies that Lusa had access to.
The sustainability report delivered together with the state budget for 2022 (OE2022) did not include inflation figures for this year as high as those recorded (in August inflation in Portugal measured by the Harmonized Index of Consumer Prices (HICP) was 9.3%, versus 1.3% year-on-year and 9.4% in July).
This document, presented together with the OE2022, already predicted that the system would run into trouble, but only in the early 2030s, according to the daily newspaper Público.
According to the document consulted by Lusa, the automatic update of pensions would push the system’s deficit to nearly €1,080 million in 2030 and to €3,314 million in 2040, contrary to forecasts made with this year’s OE of a balance of 12 million euros in 2030 and deficits of 2,243 million euros and 2,325 million euros in 2040 and 2050 respectively.
O Public further notes that automatic updating of pensions “an immediate impact on the system’s balance sheet, with the first shortages appearing half a decade earlier than expected”.
The daily also points out that the GEP accounts conclude that the Financial Stabilization Fund would run out at the beginning of the first decade of 2040, which casts doubt on the “half of the positive evolution” of recent years.
The government has announced the granting of an extraordinary allowance for disabled, old-age and survivors’ pensions from the social security system and pensioners for retirement, retirement and survival from the social security system, as part of the support package for families to cope with inflation. convergent, resident in the national territory.
The grant, paid in one lump sum in October, corresponds to 50% of the total amount earned in October 2022 as pensions or supplements for dependency, dependent spouse, extraordinary solidarity or extraordinary minimum pension.
Excluded are retirees with a pension of more than 12 times the Social Support Index (IAS) — about 5,300 euros.
Despite this extraordinary aid being paid with the October pension, the IRS will be withheld separately – a solution that prevents people from “climbing” the withholding table in October and paying a higher tax rate.
Added to the additional payment of 50% of the pension made in October, the January update ensures that each retiree next year will receive the amount that would result from the full application of the Pension Update Act.
The government has justified the solution designed in this support package, and with regard to pensions, by the need to provide pensioners with an immediate increase in income (with the extra payment in October) and to ensure the sustainability of the social security system.
Source: DN
