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OECD Reviews of Pension Systems: Portugal

image of OECD Reviews of Pension Systems: Portugal

This review provides policy recommendations on how to improve the Portuguese pension system, building on the OECD’s best practices in pension design. It details the Portuguese pension system and identifies its strengths and weaknesses based on cross-country comparisons. The Portuguese pension system consists of an old-age safety net, a pay-as-you-go defined benefit scheme and voluntary private savings. The safety net includes an old-age social pension and a complement (the so-called Complemento Solidário para Idosos or CSI), both of which pursue similar objectives but have different eligibility criteria. The defined benefit scheme has two main components: the general social security scheme (regime geral da Segurança Social) and the civil-servant pension scheme (Caixa Geral de Aposentações or CGA). The latter has been closed to new entrants since 2006 with new civil servants contributing to the general scheme. Funded voluntary pensions make up a very small share of total pension entitlements. The OECD Reviews of Pension Systems: Portugal is the fourth in the series, after Ireland (2014), Mexico (2016) and Latvia (2018), with a fifth review on Peru under preparation.

 

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Earnings-related mandatory pensions

This chapter describes the mandatory earnings-related pension scheme and its historical background. The main component of the Portuguese old-age pension system is a pay-as-you-go defined benefit scheme, the so-called Pensão de velhice. The chapter presents current pension outcomes, describes the rules of the current pension system and assesses its capacity to deliver good pensions in a financially sustainable way. It also describes the pension scheme for civil servants and other special regimes. The chapter concludes with policy recommendations to improve earnings related pensions.

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