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Portugal

5 November 2017

Portugal: Early retirement at 60 with lengthy careers

After a long series of talks with the trade unions and the employers, the government published a decree on an early retirement scheme that provides around 18,000 workers with the possibility to retire early, from the age of 60 onwards, without their pensions being reduced. The reform entered into force on 1 October 2017.

The Portuguese government expressed in the spring of 2017 its intention to ease the access to early retirement for workers with long contribution records. Since a number of years, the trade unions have asked for this reform that was seen as a necessary and righteous gesture to thousands of workers who started work at a time when child labour was common. Several successive proposals have been discussed with the trade unions and the employers organisations. The debate was dominated on the one hand by the question how to guarantee the financial sustainability of the pension system, on the other hand by the felt injustice towards workers with very long contribution records. The idea was to implement new rules for early retirement in three phases. A first category of workers with very long careers who started very early (before the age of 15) should get the possibility to retire earlier without any reduction of their pension. A second category (workers aged 63, who at the age of 60 had made at least 40 years of contributions) should get the possibility to retire at the age of 63. And a last category was meant to cover future pensioners aged between 60 and 62 or more, who at 60 also had 40 or more years of contributions.For all other workers, the penalty per month of retirement before the person’s statutory retirement age would be kept at 0.5%.

The final decree, published on 6 October 2017 in the official journal, gives workers with lengthy careers the possibility to take early retirement, without being confronted with reduced pensions. The first phase of the reform took effect as of 1 October 2017. The provision in this first phase allows workers with lengthy careers to retire earlier without with cuts. The conditions that have to be fulfilled are: applicants of at least 60 years of age must have contributed 48 years or more to the social security, or 46 years of contributions and have started working before the age of 15. The social security contributions may have been made to the general social security system or to the special pension system for public sector employers, or to a combination of the two. The government has announced further talks with the social partners. These talks are necessary to develop a complete pension reform. The idea is to complete that reform before the end of the government’s term. The current legal retirement age is 66 and 3 months.

Jan Cremers

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