The Reform of the Portuguese Public Employees’ Pension System: Reasons and Results

Abstract

In the context of the aging population and with the Portuguese public social security system reaching maturity, pension expenditures recorded a marked upwards trend in the last decade, jeopardizing the system’s long-term viability. This paper illustrates how the recent reforms in the social security system, in particular in the case of the public employees pension system, are expected to contribute to its financial sustainability and, hence, to the country’s overall public finance sustainability. In addition, the potential distributive impact of the new rule on pensions indexation is analyzed.

Keywords: pensions, social security reform, public finance sustainability, income distribution

JEL Classification: H55, J26, D31