The Organization for Economic Cooperation and Development (OECD) in the report “Pensions at the Glance 2021”, has stated that retirement age in Portugal is expected to increase by around two years until 2050, reaching 68.4 at that time.
Portugal is one of the seven OECD countries that have retirement age indexed to the evolution of average life expectancy, as are Denmark, Estonia, Greece, Finland, Italy and the Netherlands, according to the OECD report.
According to the document, in Portugal, where the legal retirement age increases by two-thirds of the increase in average life expectancy, the increase will be "about two years" for those who enter the labour market at 22 years of age and retire after a full career, without pension reduction.
The normal retirement age in Portugal will thus rise from 66.42 years in 2021 to 67.5 years in 2035, reaching 68.37 years in 2050, estimates the organization.
As for workers who have to interrupt their working lives due to unemployment, they will have to retire a year later than workers with a full career in order not to suffer cuts in their pension.
Although linking retirement age to average life expectancy makes pension systems more robust, the measure is insufficient, says the OECD, particularly given that the decline in average life expectancy is no longer seen as a “theoretical scenario. ” due to the mortality associated with the Covid-19 pandemic, an effect that will only be visible in 2022.
The organization also indicates that Portugal is one of the countries with the highest net replacement rates (amount that you receive from the pension compared to the wages you received while working) in the future, of around 90%, taking into account a complete contributory career and an average salary.
Taking into account the entire contributory career and average wages, the net replacement rate for future pensions in OECD countries is, on average, 62%.
The rate varies from less than 40% in Estonia, Ireland, Japan, Korea, Lithuania and Poland to "90% or more in Hungary, Portugal and Turkey", the document reads.
Population aging has accelerated in the last decade, impacting pensions and countries like Portugal and Spain "will face acute demographic challenges" that will affect the adequacy of pension values and financial sustainability or both, warns the OECD.
On average across OECD countries, people over 65 had an average disposable income equal to 88% of the total population in 2018.
In the last two decades, the average income of the elderly has increased by 6 percentage points in the OECD, having grown by more than 10 points in countries such as Portugal, Spain, Denmark, Hungary or Greece.