In order to reduce the impact of the changes, three different transition schemes have been agreed. These depend on the year that taxpayers started contributing to Social Security and on when they will retire. However, all those who started contributing to social security in 2002 and beyond will have retirement benefits based on their overall contribution career.
In addition, employers, labour organizations and the Portuguese government have agreed that state pension increases will be indexed in future in line with GDP, and no longer linked with the minimum national salary.
Here are some additional important points to note about the new system:
To protect longer contribution careers, the reference for the calculation of retirement benefits will be the best 40 years of contributions.
The early retirement age is raised from 55 to 57 years of age. People who have already taken early retirement are not affected.
Those who take early retirement (only possible for those with over 30 years of contributions and after age 55) will face a penalty of 0.5% per month.
No pension increases will be granted to pensioners receiving over EUR 4,630.80 per month (equivalent to 12 times the minimum national salary).
Those who continue to work after age 65 will receive a bonus of 1% per month.