Old-age pensions are heavily penalized and will only represent 38% of salary within 48 years.

The value of the average pension will deteriorate profoundly over the next 48 years, as many years as we already have of democracy, if the pension payment system does not undergo a profound reform. In 2070, the average pension could be worth only 38% of the average wage. The conclusion is contained in the book “Ambition: Doubling GDP in 20 years” by the Association for Economic and Social Development (SEDES) to which DN/Dinheiro Vivo had access. The works, coordinated by the president of the association, Álvaro Beleza, and by the president of the advisory council of the same institution, Abel Mateus, are launched today, in Porto.

At 48, a worker with an average monthly salary of 2571 euros, in 14 months, will only receive an allowance of 1005 euros, which represents only 38% of the salary he was receiving. If these projections by the working group coordinated by Maria João Louro come to fruition, there will be a substantial loss in the purchasing power of these retirees in 2070. For the moment, and in the light of the 2019 accounts, the difference is less. For example, if you earn 1285 euros per month, for 14 months, and you apply for retirement, you can count on a pension of 950 euros, which represents 72% of your salary.

From 2019 to 2070, experts point out that, despite the doubling of the average salary from 18 thousand euros to 36 thousand euros, the average pension only increases by 11% in real terms, from 13.3 thousand to 14.76 thousand euros. . It is also estimated that the retirement age will increase from 66 to 69 in 2070.

The projections take into account slow growth in the Gross Domestic Product (GDP) and a sharp worsening of the dependency ratio, which measures the ratio of people over 65 to the population between 15 and 64 years old. “In such a way that Portugal, in 2050, will have the highest dependency rate, on a par with Spain, among the countries of the European Union (EU)”, explains the work.

“Demographic change combined with a slow growth in potential GDP, around 1% per year, well below the EU average, has devastating consequences for the lack of progress of the Portuguese economy and, in particular, on the pension system of the reform”, warn the experts.
The main consequence, in Portugal, will be the sharp fall in the rate of replacement of pensions in relation to the last salaries. In Portugal, this ratio will fall from 74% in 2019 to 41% in 2070. The 33% drop is exceeded only by Spain (36%) and Latvia (35%).

The book also cites the scenario produced by the Portuguese Association of Investment, Pension and Wealth Funds (APFIPP). Taking into account relatively positive variables – such as an average annual GDP rate of 1.7%, an average unemployment rate of 8%, an annual increase in labor productivity of 1.4% and a annual inflation of 2% -, the APFIPP estimates, however, that “the deficit of retirement pensions from the contributory scheme will worsen in the years to come, leading until 2046 to a budget deficit of more than 5% of GDP “. “If to these figures we add that of social pensions, which represent a deficit of 1.6% of GDP, this means that the primary balance of the State Budget necessary, just to balance the deficit of Social Security pensions , cannot be less than 8% of GDP between 2021 and 2036”. The APFIPP warns that this “seems to be a very difficult objective to achieve”.

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