Portuguese pensions law in limbo after PM resigns
PORTUGAL – Yesterday’s shock resignation of Portuguese prime minister, Antonio Guterres, after local elections swept his Socialist party from power in the country’s main cities and towns, has left the fate of proposed new pensions laws up in the air.
One of the main points of the new law, which was due to be published shortly, was that people joining the Portuguese social security system were set to move to a pension benefit system based on a career average.
Currently, pension payments in Portugal are based on the last ten years of employment.
Bernie Thomas, a senior consultant with Watson Wyatt in Lisbon, comments: “The law was due to be published therefore we don’t know if it will come into effect or not. There’s going to be elections and a new government in February/March and we don’t know what the new government will do. Are they going to review everything or will they pass the law as it is?
“It really is up in the air.”
Thomas says the new law would have implied some significant reductions for new people joining the social security system, but adds that there would have been a 20-25 year transition period where not a lot would have happened while people still received the benefits of the old system.
“In terms of this law affecting anyone, you would have been looking at people who would be thirty to thirty five years old now, “ he adds.
Thomas also says there were reservations in Portugal on what the impact of the proposed reform would have been: “We know that it wasn’t going to solve the financial problems of the system and in fact there were some minor benefits involved in the changes for some people, so that clearly wasn’t going to improve the financial situation. We were expecting the whole thing to be reviewed in the short term anyway.”