Portugal’s Prime Minister Pedro Passos Coelho has admitted that state pensions will fall by as much as 50% over the next 20 years.
In an interview with Correio da Manhã published on Saturday, he said that anyone who shared his age, 47, would find their pensions worth half the amount of someone who retired in 2007.
Instead, the prime minister advises the Portuguese to “save more” for their retirement.
“My pension will likely be one half of what it would have been in 2007 (before the Pensions System Reform). In future, pensioners will not get a pension over a fixed amount and should make provision now in (private) pension applications,” he said.
The projected reduction takes into account financial sustainability, in that life expectancy has risen over the past decades.
In 2012, those entering retirement will already suffer a reduction in their pensions by 3.92%. The only way of escaping the cut is to work up to a year more. “Future pensioners know that they won’t receive a pension over a fixed amount from Social Security,” he said, advising people to open up their own private pension funds.
According to a study by the High Commission for Immigration (ACIDI), the Portuguese Social Security system received €316 million from foreign national insurance contributors alone in 2010.
Social Security payments from foreigners living and working in Portugal have steadily risen over the past 20 years thanks to the influx of immigrants from Brazil and Eastern Europe.
The numbers from the study ‘Immigrants and Social Security in Portugal’ were presented on Friday last week at the Gulbenkian Foundation by the ACIDI (Alto Comissariado para a Imigração).
The same study also revealed that Social Security contributions from foreigners are increasing steadily with many independent workers paying up to €245 per month.
However, “the contributions continue to be largely in cash,” says Study Coordinator, João Peixoto from the Lisbon-based higher education institute ISEG.
Contributions from foreign citizens represent around 4.3% of the total, adds Carlos Pereira da Silva, an economist at the same institute.
“Immigrants work like dogs, are treated badly yet even so they give our Social Security system €300 million,” he says.
In 2002, the total amount of Social Security payments from foreigners in Portugal stood at €433.4 million, by 2010 that figure had jumped up to €580.2 million, while social payments increased from €29.9 million to €211.6 million.
“Because of positive integration and immigration policies they have had access to decent social protection,” he stresses, allowing them to “weather the crisis”.
“Immigrants have been making significant contributions and have demanded relatively little in return,” he concludes.