Government tweaks pension calculations in billion euro spending cut

Government tweaks pension calculations in billion euro spending cut

Photo: MÁRIO CRUZ/LUSA
Caption: Thousands of pensioners protesting against pension cuts descended on Lisbon last weekend
The way pensions are calculated is changing next year in yet another government bid to trim public spending.
As thousands of pensioners took to the streets in protest last weekend, the revised pension calculations were due to be discussed by the Council of Ministers.
According to Correio da Manhã newspaper, the new formula will follow the German model that fixes an annual ceiling on pension costs.
An EC document, due to be analysed by ministers on Tuesday, is reported to say: “A pension should include short-term measures, reinforcing the link between pension rights and demographic and economic criteria.”
Right now, pensions are calculated solely on the basis of age and the number of years in which tax on earnings were paid.
The new model will mean that economic growth, or lack of it, will affect people’s pensions – while the balance between the number of working and retired people in a given area will also be taken into account.
This is just one of a whole series of cost-cutting moves designed to trim as much as a billion euros off public spending in 2015.
Calling the package a “strategy of poverty”, Socialist leader António José Seguro said “this government has to be strongly watched”.
Meantime, Prime Minister Passos Coelho braved the crowds in Valpaços on Sunday, where he was variously supported and called a “fascista” (fascist).