Lisbon, Aug. 19, 2026 (Lusa) - The working group on social security reform in Portugal considers that the progressive nature of the rules governing pension adjustments «is debatable» and argues that all pensions should be adjusted at least in line with the rate of inflation.
In the report «Reforming Pensions in Portugal – Towards a Sustainable, Adequate and Fair System – A Contract between Generations», to which Lusa had access, the experts emphasise that the pension adjustment rule «is relatively predictable», given that «it is based on observable indicators and contains an explicit differentiation in favour of lower-value pensions», providing «greater protection» for the most vulnerable pensioners – that is, those with pensions up to 2 IAS [pensions equal to or less than twice the Social Support Index. In 2026, with the IAS set at €537.13, this limit corresponds to pensions of up to €1,074.26 per month. This measure serves to define the annual adjustment thresholds and social support levels].
This rule «helps to mitigate the risk of monetary poverty in old age and to preserve, at least partially, the purchasing power of the most vulnerable pensioners», noting that «this aspect is particularly important in a context where a significant proportion of contributory pensions are of low value and where non-contributory support plays an essential role in social protection».
However, they warn that the use of thresholds creates «horizontal equity issues», arguing that «two pensions of very similar value may receive different adjustment rates if they fall on opposite sides of a threshold».
«In a mature contributory system, where small differences in pension value may reflect real differences in contribution history, these breaks in the progression of benefits may affect the perception of contributory justice and reduce the transparency of the relationship between contributions and entitlements», they add.
For the team led by economist and professor Jorge Bravo, «the introduction of progressively increasing adjustment rates in the rules for pension indexation is debatable in the light of the principles of intragenerational equity and actuarial neutrality, insofar as it weakens the direct reciprocal relationship that should exist between the legal obligation to contribute, the right to benefits and the respective amount».
«Furthermore, as it is not means-tested, this implicit redistribution from average and higher pensions to those of a lower value does not guarantee that support is effectively directed towards beneficiaries in greatest need», the report argues, noting that it may cover pensioners who, despite being in the lowest bracket, «have other significant income or assets, or who have adjusted their contribution behaviour in order to maximise the benefit from the applicable rules».
The experts therefore argue that, rather than «the current rigid thresholds», the pension adjustment rule «should apply equally to all pensioners», that is, following «a uniform formula».
During the presentation of the report on Tuesday, Jorge Bravo had stated that the pension adjustment rule should guarantee all pensioners «at least the rate of inflation», with the aim of preserving purchasing power.
The formula he proposes has three components: inflation, shareable real growth «and, if necessary, in the event of imbalances, an adjustment factor to ensure long-term financial sustainability», he explained.
By law, pension indexation takes into account the average real growth in Gross Domestic Product (GDP) over the last two years and the average change over the last 12 months in the consumer price index excluding housing, as published in December.
The final report was submitted to the Government in July and presented on Tuesday; amongst the various proposals, it suggests reforming the penalty for early retirement, creating new retail-segment public debt instruments to supplement pensions, or adopting occupational pension schemes with automatic enrolment, which allow for opt-out.
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