PORTUGAL - A new first pillar defined contribution scheme will be launched in Portugal on 1 March.
Known as the Regime Público de Capitalização or public capitalisation system, it will be a voluntary, individual, funded and complementary scheme.
The administration and investment of the new scheme will be undertaken by the State Fund Management Institution (IGFCSS) which manages the Portuguese reserve fund, the €7.5bn Social Security Financial Stabilisation Fund (FEFSS).
People can choose to put 2%, 4% or 6% of their salary into the scheme and buy shares - certificados de reforma - in a common fund.
At retirement, people can withdraw all the money from their personal account or use it to buy a life annuity, he added.
A tax incentive of 20% will be granted to contributions of up to €350 per year .
The initiative follows the parametric reforms introduced by successive Portuguese governments since 2002 will have the affect of reducing the state old age pension.
The new system is intended to allow people to contribute an additional percentage of their salary so they can have an additional, complementary pension on retirement, Cruz added.
The accounts will be managed separately from the reserve fund but will have the same investment profile, Cruz said.
Have Your Say: Peter Kraneveld, says:
If it walks like a duck, quacks like a duck and looks like a duck, chances are that it's a duck.
But if it's a voluntary, individual, funded and complementary scheme it's not second or third pillar but a first pillar scheme?
Did someone say IORP avoidance?
Have Your Say: José Veiga Sarmento, says:
It's not a duck, it's a dinosaur.
If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com
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