The likelihood of a fundamental reform of Portugal's social security system has receded with the publication of a white paper by a commission of experts which includes several diverse and in some cases conflicting opinions on the way forward.

Last year the commission, which was set up by the Social Security ministry, published a green paper which canvassed widespread involvement of the private sector in social security pensions provision.

A lot of the issues in the green paper have been revisited. But if there is any fundamental difference it is that the options have been widened considerably," says Bernie Thomas of Watson Wyatt in Lisbon.

The white paper which runs to over 400 pages has ten different sections containing different viewpoints. The views included range from the assertion that a clamp-down on companies defaulting on social security will suffice to proposals for cutbacks in social security, private sector involvement and the introduction of more flexibility.

The white paper does clearly retreat from suggestions of flexible retirement ages with penalties for early re-tirement and possible incentives to work beyond 65. There is now general agreement on allowing retirement from age 60 onwards provided retirees have had 42 years of contributory service with social security.

"Anyone who considers 42 years as a minimum requirement for flexibility is not talking about flexibility at all," says Thomas. "We are a little bit disappointed with it, because there is no uniform set of recommendations for the government. It just does not meet the criteria for a working document with which the government can say 'Great, let's go ahead'." It is now uncertain what shape if any the reform will take and this uncertainty will be bad for Watson's clients.

"It is going to create even more uncertainty in the market. Our cli-ents, from multi-nationals to domestic companies, much prefer a stable environment where they can plan their costs for the next couple of years and can put plans in place that they won't have to alter," he adds.

He believes, however, that the Port-uguese market will prove to be a lucrative one regardless of the direction of reform, with the consultancy having, in recent years, expanded its client base beyond multi-nationals to cover significant numbers of domestic companies from large to small cap, providing investment performance monitoring, ALM and with a significant position in manager selection. John Lappin"

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