PORTUGAL’S MINISTER of Finances, Teixeira dos Santos, has admitted on television that unless urgent measures are quickly taken, the government will not be able to pay state pensions within 10 years.
Talking on RTP 1’s current affairs news programme, Prós e Contras, recently, Teixeira dos Santos warned: “The social security system, as it stands, has to be remodelled because its future is compromised.” The reason given is that more Portuguese are surviving into old age and the children of the so-called baby boom generation will begin retiring from 2015-2020.
Another problem is Portugal’s low level of growth and productivity, which coupled with falling birth rates mean that there will not be enough money in contributions coming from the working population to pay pensions for the retired. By 2050, a massive 34 per cent of the population will be retired, according to the latest estimates. At present, 17 per cent of the Portuguese population is over 65 years old.
Former Secretary of State for Social Security, Fernando Ribeiro Mendes, agrees with the Minister of Finances, while parliamentary deputy Eugénio Rosa told TSF that the situation was serious, but being alarmist would not solve the problem. Various solutions are being studied by the government including raising the retirement age from 65 to 67, while encouraging those able to pay to take private pension schemes.