Tuesday, May 16, 2006

Portugal's Pension Reform

by Edward Hugh

Portugal is going to reform it's pension system. This is hardly 'breaking news', but still it is something. Details at present are few, and probably it is a case of too little too late, but nontheless there do seem to be some interesting details. Like the idea of attaching contributions to the number of offspring. This makes a good deal of sense. In the short term this will not change things very much, but it may be a step in the right direction:

Workers with fewer than two children will have to contribute more to their government pensions under planned reforms to prevent the collapse of Portugal's retirement system, the prime minister said in an interview published Monday.

Contributions would stay unchanged for people with two children, decrease if they had more than two and increase if they had fewer, according to an interview with Socialist Prime Minister Jose Socratesto published in the Financial Times.

A Portuguese pension is calculated as a percentage of the top-earning 10 years of the last 15 years of the recipient's working life.

Under the reforms, the pension would be calculated according to the employee's entire working life, the Financial Times said.

Oh, and there was one other snippet in the same article:

With retirements looming for 78 million baby boomers, the trustees for the U.S. Social Security program said this month that its trust fund will be depleted in 2040, a year earlier than expected.The point at which the program will pay out more in benefits than it takes in will occur in 2017.

No comments: