The Pension Landscape Portugal


The statutory pension scheme is the dominating pension scheme in Portugal and compulsory for the entire workforce. In the past years Portugal’s pension system has undergone certain important legal changes. There used to be, for example, a special scheme for civil servants, the managed by the Caixa Geral de Aposentações (CGA). But from 2006 onwards, also new public employees are enrolled in the Social Security System. Traditionally occupational pensions are not very widespread in Portugal.

Statutory Pension

Public Pension Scheme Centro Nacional de Pensöes (CNP)
Mandatory insurance for the employees, self-employed and - since 2006 - also civil servants.
  Financing: Financed on a pay-as-you-go basis.
The total social security contribution is 34.75 %. The employee pays 11% and the employer 23.75%. Out of the total social security contribution 16.01% go to the public pension system.
As of 2014 the legal retirement age will be 65. The minimum qualifying period for an old-age pension is 15 years of contribution. Benefits are calculated on an earnings-related basis.

Calculation basis

The pension depends mainly on average earnings and years of insurance. The accrual rate for every year of insurance is 2 – 2.3 % of the pensionable reference earnings.

The reference earnings are determined as follows:
sum of adjusted annual earnings(years of contribution x 14)

Since 2008 the pension calculation also includes a sustainability factor which adjusts the pension to life expectancy and reduces the pension amount.


The formula for an old-age pension is:

Reference earnings x accrual rate x sustainability factor

Only the best 40 annual earnings are taken into account.
    Although replacement rates in Portugal are fairly high, it must be noted that the average earnings are low. (

There are 14 monthly payments per year. There ist a means-tested minimal social pension for people with no or low income.

Occupational Pension

The coverage rate is still very low. No more than around 3.7 % of Portugal’s workforce is covered by an occupational pension scheme (
Pension funds used to be concentrated in the banking and the telecommunications sector.
  Tax incentives: An amount of 25 % of the employee’s contributions is tax-deductible from taxable income up to an annual ceiling (

Private Pension Savings

Products: Individual acquisition of open pension units (Fundos de Pensões Abertos), pension insurance retirement contracts (Fundos  Poupança Reforma), personal retirement saving funds (Fundos Poupança Acções), pension insurance retirement contracts.
  Tax incentives: Contributions are tax-deductible up to a certain limit.

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