Early retirements will get a 14.7% cutback in 2019

  • ECO News
  • 30 November 2018

Next year, early retirees will get a cut of 14.7% on their pensions. In contrast, this cut, known as the sustainability factor, is now standing at 14.5%.

The sustainability factor was introduced in 2008 during Sócrates’ administration and it was designed by Minister Vieira da Silva. It ties the value of new pensions to the evolution of average life expectancyat the time, there was a 4.78% cut to pensions, which has been aggravated with time. The most severe increase was registered in 2014 when the sustainability factor jumped from 4.78% in 2013 to 12.34% in 2014.

Next year, those who chose early retirement will note a cutback of 14.7% in their pensions, in contrast with the current cut of 14.5% attached to the sustainability factor. This aggravation is explained through the ageing of the population or better, the increase in life expectancy of the Portuguese, which, according to the National Statistics Office got to 19.49 years after the 65 years old threshold.

Taxpayers which had very long careers or a long contributory career are excluded from that cutback. Those which in January are 63 years old and retire, and those which are 60 in January (or October)and have a career with a 40-year contributive period, can also be excluded from this cutback. These are the new rules presented on the State Budget for 2019 by António Costa’s administration, known as the “new retirement flexibilization scheme”. However, the early retirees will still suffer a cut of 0.5% for each month which is prior to the legal retirement age.

The changes in the sustainability factor will affect those which did not have complete, 40 years long, contributory careers. It is not mandatory however to reach those time criteria in order to get retired. The Labour Minister also wanted to resume this sustainability regime, but he ended up deciding the issue should be debated in the next election run.