Pension reform fuels intense debate

A controversial plan suggested by the Portuguese government to implement a 10% cut in public sector pensions has led to rounds of intense negotiation between public administration unions and the Secretary of State of Public Administration.

The fact that the government has changed its original proposal, so that people receiving survival pensions under €419,23 (which are granted to the heirs of a deceased family member) are not affected by the 10% cut has failed to appease the unions’ opposition.

Earlier this week, Ana Avoila, head of the Frente Comum union, deemed the proposal as “unconstitutional”.

“We are going to ask for additional negotiating stages and present a number of proposals concerning the sustainability of the Social Security services, but for now the government has closed the process,” she told journalists.

The government’s original proposal suggested that people receiving a minimum pension higher than €300 would be affected by the cuts. The union, however, forced the government to raise the limit to €419,23.

Those receiving retirement pensions below €600 are free of cuts, as decreed in the previous document.

Also, pensioners above the age of 74 who receive pensions under €750, will not fall under the government’s plan, as well as those benefitting from disability pensions from the Portuguese armed forces.

At the time the proposal was first revealed, in the beginning of August, Frente Comum had reacted strongly.

“The government cannot steal any more money from those who worked and paid their taxes all their lives. While the banks continue to receive millions the government is stealing from the poorest,” the union said, adding that these cuts were “unfair, unjustifiable and unacceptable”.

According to statistics from the government, 302,268 retirement pensions will be affected by the cuts, while 134,302 will remain untouched.

In terms of survival pensions, 44,000 will be subject to cuts, while 84,480 will escape the clampdown.

State pensions will see 9.87% cuts for pensions obtained before December 2005 and 7.87% cuts for those received this year.

Data also shows that the Public Sector Pension System (Caixa Geral de Aposentações – CGA) provides pensions to 436,570 people, which amounts to a total of around €589 million. The average value of the pensions is approximately €1,350.