Retirement and the Poverty of the Elderly in Portugal

In 2001, the retired male receiving a pension under the public servant scheme represented
65% of all pensioners. In the general scheme this figure falls to 55%. The proportion of
women receiving a pension under non-contributory scheme and RESSAA was greater than
that of men (about 70% and 75%, respectively).

With regard to contributory pensions there are significant differences between the two
schemes when considering the average pension of new pensioners (Table 2-2).

The figures for the new pensions revealed a significant increase in nominal terms between
1994 and 2001: 45% and 78% for workers coming from private sector and public officials,
respectively. Despite the generosity of the benefit formula under the general scheme the
average monthly new pension in 2001 was 352 euros which represented 48% of the average
monthly earnings and only 29% of average pension under the public servant scheme (1225
euros, corresponding to 1,7 times the average earnings).

There are a number of reasons for this. First, the differences between the pension rules
described above. Second, and more important, the short contribution career of retired
people under general scheme. In 1994, the average contribution period was only 21 years;
73% of retirement male had paid contributions for 20 years or less and this figure increased
to 88% for retirement female. ⁹

Another way of analyzing the differences between the contributory schemes is to look at
the number of pensioners by level of pension (Table 2-3).

Whereas a pension of 500 euros or less was granted to 92% of pensioners under general
scheme this rate shifted to 31% in the public servant scheme.

In nominal terms, minimum and social pensions have been increased significantly. All
pensions are adjusted once a year (on December) with regard to inflation rate but different
increase rates have been applied in different pensions with lower pensions getting a higher
increase.

⁹ The Portuguese social security scheme (established in 1935) only became universal after 1974. The maturity
will be reached after 2015.

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