Pensions under pressure

PORTUGAL’S INCREASINGLY ageing population is likely to cause a crisis in national pensions over the next two decades.

According to government forecasts, and using Portugal’s gross national product in 2007 of 162 billion euros as a benchmark, pension expenses are likely to spiral from 16.3 billion euros in 2005, to 20.6 billion euros in 2020.

Based on these predictions the state is likely to pay out 4.3 billion euros per year in pensions – more than the total expected investment for the construction of the new international airport.

Forecasts included in the Growth and Stability Pact (PEC) make it clear that pension costs will gradually increase until 2050 and that by 2020, state spending on pensions will represent 12.7 per cent of the country’s total wealth, against 11 per cent in 2005.

By 2050, Portugal is likely to be in fourth place of EU countries with the most elderly populations.

With the new reforms drawn up by the Minister of Employment and Social Security, Vieira da Silva, the Secretary of State for the Budget, Manuel dos Santos guaranteed on Friday evening that “we will have a sustainable social security system in the next two decades” and that “public spending could be reduced despite of pensions”.

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