Lisbon, Aug. 19, 2026 (Lusa) - The report on social security reform in Portugal presented on Tuesday argues that the civil service pension fund balance and that of the social security system have been misinterpreted, and proposes a series of measures such as the introduction of automatic occupational pension schemes.

The recommendations also include revising the penalty for early retirement, creating new retail-segment public debt instruments to supplement pensions, and introducing a retirement savings account for young people.

Following the presentation, the Government reiterated that it will not proceed with a structural reform of social security during this parliamentary term, considering the matter closed, and noted that the report is a further contribution to the public debate on the subject.

+++ Viewing social security and the civil service pension fund in isolation «is misleading and incorrect» +++

The working group set up to study social security reform argues that analysing the pension system in isolation constitutes an «incorrect, incomplete and misleading» interpretation of the sustainability of social security, challenging the surpluses that have existed in recent years.

«Any isolated analysis of the balances of the CGA [Caixa Geral de Aposentações - the civil service pension fund] and the pension system is illusory and incorrect,» stated Jorge Bravo, economist and leader of the working group, during the presentation of the findings in Lisbon, arguing that «the correct analysis would be a joint analysis» of the two systems.

According to him, if we combine the balances of the social security system with those of the convergent social protection scheme, whilst eliminating the «reclassification effects», the combined balance «is negative in all the years analysed».

«The combined balance of the contributory systems has always been negative in Portugal,» he said, adding that, if the effect of early retirement pensions is corrected, by the end of 2025 the current balance would be a deficit of around €1.944 billion.

+++ Individual accounts for each worker +++

This report, to which Lusa had access, proposes the introduction of a «public defined-contribution accounts scheme (NDC)», which, in practice, involves the creation of a single individual account for each beneficiary, with an annual record of actual contributions, real contribution credits, revaluations, any administrative costs charged and the accumulated balance.

The account balance would be linked to salary progression, and the accumulated capital would then be converted into a lifetime pension.

+++ Automatic occupational pension schemes +++

The experts advocate the adoption of occupational pension schemes with automatic enrolment, which allow for opt-out. According to the group's leader, this measure would be important «to supplement the state pension, not to replace it».

At issue are «retirement savings schemes, in which eligible workers are enrolled by default upon signing an employment contract, or, for existing schemes, enrolment is automatic, making them eligible for the system; however, they always retain the option to opt out by exercising a withdrawal clause if they do not wish to participate».

+++ Retirement savings account for young people +++

Another measure suggested by the working group is the creation of a youth savings account, aimed at children and young people, featuring automatic enrolment, in order «to promote pension savings from a very early age».

This refers to the «grão a grão» [grain by grain] programme, which also aims to serve as a «pretext» for introducing financial literacy in schools, explained Jorge Bravo.

According to him, this is an individual retirement savings account for children and young people, which is «universal in nature and involves automatic enrolment».

«All children resident in Portugal who are enrolled in the education system are automatically enrolled and receive public support, should the proposal naturally be approved,» he suggested.

+++ Experts propose new public debt instruments to supplement pensions +++

The working group also proposed the creation of new retail-segment public debt instruments to serve as a supplement to pensions.

The aim is to have «more savings allocation instruments» as alternatives to deposits, such as savings certificates or Treasury certificates, the main difference being that this instrument combines an accumulation phase with a repayment phase in the form of a temporary monthly annuity.

+++ Saving through consumption +++

Another of the suggested measures is the «Save As You Buy» programme, or «saving through consumption». The idea behind this programme is to harness consumption habits to save money, for example through invoices bearing a tax identification number.

The scheme is based on a savings-consumption account, which «is simply a way of recording these small transactions, which would then be channelled into regulated financial products – the ones the worker must subsequently choose», explained Jorge Bravo.

+++ Measures to capitalise on the value of pensioners' homes +++

The working group argues that there should be schemes to capitalise on the property assets of low-income pensioners, in particular by allowing them to remain in their homes.

According to the report, Portuguese households' wealth is concentrated in assets such as property, but a significant proportion of these households may, at the same time, face liquidity constraints when it comes to funding healthcare costs, care for dependants, home adaptations or long-term care.

In this scenario, the team suggests the implementation of «Equity Release Schemes», schemes that «allow property wealth to be partially converted into income and/or services, whilst preserving – depending on the contractual arrangement chosen – the right to remain in the home for the rest of one's life or until moving to another residential facility».

+++ Reform of the early retirement penalty +++

The experts suggest that the early retirement penalty should be reformed, as they consider there to be a double penalty comprising the monthly reduction and the sustainability factor.

The experts argue that a «possible solution» would be to «replace the rather opaque combination of the two mechanisms with an integrated factor, in which the actuarial neutrality component and the additional financial sustainability component would be presented separately».

The report also indicates that the reduction in the pension through the sustainability factor could reach 28% by 2050 and 41% by 2100.

+++ Changes to incentives for workers remaining in the labour market +++

The working group also proposes changes to the incentives for workers who remain in the labour market beyond the statutory retirement age.

«In the case of deferred retirement, it is recommended that bonus payments should no longer depend solely on the contribution history but should also take into account the actual age at which retirement is deferred,» the report states.

According to the experts, this change «would bring statutory bonuses closer to actuarially neutral incentives», although «it should, however, be designed in a simple and transparent manner, avoiding excessive discontinuities between career brackets and ensuring clear communication with workers».

MES/AYLS // AYLS

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