Old-age pension: No means testing to children’s income.

Portugal is one of the OECD countries where the decline in the working-age population will be the most drastic in relation to the number of pensioners. This is the key message from the latest OECD country review of Portugal’s pension system. To put it in simple terms, there will be seven people aged over 65 for every ten people of working age (up to 65) in 2050.

 

Despite recent pension reforms – including linking the retirement age to life expectancy – this should be reason enough to implement further reforms. The OECD recommends that the existing sustainability factor, which currently only penalises early retirement, should be used to adjust pension benefits across the board. The three existing mechanisms for generating an adequate basic pension should be merged. At the same time, means testing to children’s income should be removed. The other recommendations found in the review are ‘standard’ and are familiar from the EU’s policy recommendations, including promoting occupational pension plans, the so-called second pillar.