Portugal’s pension system needs to prepare for rapid population ageing

elderly 2019

(Unsplash)

This article is brought to you in association with OECD.


Portugal needs to reform its pensions system to address the challenges of a fast-shrinking workforce and high levels of old-age inequality, according to a new OECD report.

The OECD Reviews of Pension Systems: Portugal says the country’s rapidly ageing population, a result of low fertility and rising life expectancy, is putting pressure on pension finances. The total population recently started to shrink and is projected to fall below 9 million by 2050 from a peak of 10.7 million in 2009, due to a sharp decrease in the number of young people and working-age adults.

The working-age population decline will be among the steepest among OECD countries, with the number of 20-64 year-olds set to fall by 30% by 2050 compared with an average drop of 5% on average in the OECD area. There will be 7 people older than 65 years for 10 people of working-age in 2050, against slightly more than 1 in 3 now and 1 in 5 in 1975. This could have a major impact on the labour market, economic growth and pension finances, according to the report.

“Portugal has profoundly reformed its pension system over the past decades and made it more financially sustainable,” said Stefano Scarpetta, OECD Director for Employment, Labour and Social Affairs, launching the report in Lisbon with Portugal’s Minister of Labour, Solidarity and Social Security, José António Vieira da Silva. “Now the focus should be on strengthening the incentives and ability of older people to stay longer in the labour market, simplifying the old-age safety-net and pension system, and improving its design to better cope with longer lives.”

Recent major pension reforms in Portugal have included aligning the retirement age between women and men; linking the retirement age to life expectancy; increasing the period to calculate the reference wage; and gradually integrating the scheme for civil servants with the general regime. However, the current pension system can still be improved.

Income inequality among older people is high in Portugal, even though safety-net provisions reduce the risk of old-age poverty, which is below the OECD average. However, access to these provisions is not always straightforward. Administrative complexity generates costs and contributes to long waiting times, and some people may be discouraged to apply for benefits. At the same time, non-contributory benefits should be simplified to avoid the multiplication of instruments with similar objectives. In particular, the old-age social pension, the complement (CES), and the top-up (CSI) should be merged while the CSI’s means testing to children’s income should be removed.

The current link between the statutory retirement age and changes in life expectancy is needed to ensure the financial sustainability of pension systems. That link should be extended to the minimum age of early retirement. Moreover, while longer working lives should be encouraged, the sustainability factor, which was reformed in 2014, only generates a very large penalty in case of early retirement. While appropriate financial penalties for early retirement are needed, the sustainability factor should rather be used to adjust pension benefits across the board as an ultimate instrument to ensure financial sustainability.

Incentives to contribute to voluntary pension schemes should also be improved and occupational plans promoted to increase coverage. Pension fund regulation should be enhanced.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Parliament adopts its position on digital copyright rules

On Youth Education: “Just a normal day in the life of a medical student”

The green hydrogen revolution has started, and it won’t be stopped

Varna (Bulgaria) awarded European Youth Capital 2017

Ebola: EU provides an additional €30 million to tackle the outbreak in the Democratic Republic of Congo

Tuesday’s Daily Brief: prizewinning journalists freed in Myanmar, new tracking tool for suspected terrorists, and a global bid to stop snakebite deaths

Mental health and suicide prevention: the contradictory access in a reference city of southern Brazil

First Western Sahara talks at UN in six years, begin in Geneva

Killing of aid worker in Syria part of ‘disturbing trend’

Drones are saving lives in Tanzania’s remote communities

“Leaked” TTIP document breaks post 8th negotiations round silence and opens door to critics

Here are three technology trends changing the way you travel

UN’s Bachelet rejects Sri Lankan official’s ‘spin’ on Human Rights Council encounter, urges reforms

Don’t let smoking steal life’s breathtaking moments, urges UN health agency

Eurozone plans return to growth

Afghanistan: UN condemns blasts that leave 8 dead at cricket stadium

These are the 5 most exciting cycling projects in the world

MEPs and European Youth Forum call on EU to Invest in Youth

LGBT community in Chechnya faces ‘new wave of persecution’: UN human rights experts

UN launches Facebook Messenger-powered bot to take on climate change

Why we need artists who strive for social change

Botswana has decriminalized gay sex. But, it’s still illegal in 70 countries

French elections: by the time the EU economy revives and the migration crisis is solved extremists could take over Europe

Estonian Prime Minister Ratas: Europe is a thought that must become a feeling

UN Children’s Fund chief condemns ‘horrific’ Kabul bomb attack

The age of influence: why digital platforms must come clean about political ads

Council’s position on Visa Directive a step back for young people’s mobility

Posting of workers: final vote on equal pay and working conditions

European welfare states are failing young people

How the future of computing can make or break the AI revolution

Google prepares to final EU judgement over Android antitrust case

Chart of the Day: These are the world’s most innovative economies

Greece and Ukraine main items on EU28 menu; the course is set

New citizenship law in India ‘fundamentally discriminatory’: UN human rights office

This AI trash can is designed to stop you wasting food

WEF Davos 2016 LIVE: “CO2 is not the problem, it is the symptom”, the pilots who crossed the world using solar energy cry out from Davos

It’s just electronic cigarette, don’t worry?

Teamgum @ TheNextWeb 2014

South Korea: A cherished partner for the EU

The EU launches € 1 billion plan on supercomputers and tries to catch-up with competitors

The sad show of Brexit

India is investing more money in solar power than coal for first time

This is the critical number that shows when housing breaks down

How energy infrastructure is shaping geopolitics in East Asia

EU Parliament: Deposit guarantee and trading platform transparency sought

EU summit: Are the London Tories planning an exit from the EU?

Is Eurozone heading towards a long stagnation?

Movius @ MWC14: Discussing novel Communications Applications over a “CAFÉ”

Could the EU’s ban on palm oil in biofuels do more harm than good?

The metamorphosis of the categorical imperative in medical students

Why the Fourth Industrial Revolution needs more arts graduates

This digital currency could build a more sustainable global economy

Key Brazilian border crossing for Venezuela refugees reopens as asylum numbers pass last year’s total

Indonesia has a plan to deal with its plastic waste problem

An EU first: youth Ministers debate youth participation in live broadcast

Britain aligns with EU rivaling US on trade and Iran, abandons bilateral ‘Midsummer Night’s Dream’

Guterres holds ‘focused and frank’ informal discussions over future of Cyprus

UN’s Grandi slams ‘toxic language of politics’ aimed at refugees, migrants

Rich economies not a promise of education equality, new report finds

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s