The pension security cushion in Portugal has reached a historical high. The Social Security Financial Stabilization Fund (FEFSS) for the first time exceeded € 20 billion.
The landmark was hit in September 2019 for the first time since it was formed 20 years ago. This historic mark corresponds to 9.9% of Portuguese GDP, which was around 200 billion euros in 2018.
This milestone was announced this Thursday, September 5, by the Ministry of Labor, Solidarity and Social Security (MTSSS).
In a theoretical scenario, the 20 billion allowed to fully cover the payment of pension in Portugal for 18.5 months, if there were no income during this period, highlights the tutelage.
In December 2015, the value of the FEFSS reached 14,097 million euros, having increased by six billion since then.
The reinforcement of the FEFSS has been a priority of this Government, namely by investing in the diversification of funding sources, with the allocation to the FEFSS of the revenue from Additional to IMI, since 2017, and the revenue from a portion of the IRC, since 2018.
The Government points out that the FEFSS has been strengthened due to its focus on diversification of funding sources, by earmarking IMI surcharge revenue since 2017 and a portion of IRC revenue since 2018.
“On the other hand, it should be noted that traditional sources of financing, such as a share of the value of employees' contributions, the balances of the social security system and the return on social security assets, have increased this increase, in a context of solid and sustained growth in contribution revenues as a result of the increase in employment and wage bill ”, highlights the ministry supervised by Vieira da Silva.
This year's state budget provided for the FEFSS to be EUR 17,583 million. Thus, “given the much higher current values, a further increase in the FEFSS sustainability horizon can be expected”, argues the tutelage.
The FEFSS aims to “ensure the financial stabilization of the Social Security contributory system, constituting itself as a reserve. This reserve is intended to cover, where necessary, foreseeable pension expenditure, in particular in periods in which contributory income is lower than contributory expenditure and has never been used, ”explains the supervisory authority.