Early Pensions Rise in 2024 despite Efforts to Encourage Continued Work
Lisbon - New data reveals a notable increase in early retirements in Portugal during 2024. Social Security granted 24,300 pensions to individuals retiring before the legal age, a 19.2% jump from the previous year, according to a report accompanying the 2026 State Budget proposal. This rise coincides with the previous government’s 2023 decision to pause planned increases to the retirement age.
The increase in early pensions is largely attributed to “age adaptability,” allowing workers to retire before the standard age, which rose 32% to 15,300 – the highest level in four years. Early retirements due to long-term unemployment also saw a slight increase of 1.9%, reaching nearly 9,000.
political Decisions Impact Sustainability Factor
while the government halted increases to the retirement age in 2023, dropping it to 66 years adn 4 months and lowering the sustainability factor to 14.06%,a subsequent statistical review revealed a higher-than-anticipated increase in life expectancy. Despite this, the Ministry of Labor maintained the lower age and factor, preventing an immediate further increase in the retirement age but ultimately worsening the sustainability factor for 2024 pensions, which now stands at around 16%. This resulted in increased penalties for those choosing early retirement. The legal retirement age is currently 66 years and 7 months and is set to rise to 66 years and 9 months in 2026.
Government Reviewing Early Retirement Rules
The current government, led by Rosário Palma Ramalho, recognizes the need to address thes trends.A working group was commissioned to review the early retirement regime with the goal of encouraging workforce retention and boosting contributions. An interim report was submitted in July but has not yet been made public.
Despite the increase in new early pensions, the total number of individuals currently receiving early retirement benefits (those who retired before reaching the normal retirement age) decreased slightly in 2024, falling 4.5% to 102,000.
Early pensions are subject to penalties, decreasing by 0.5% per month remaining until normal retirement age, plus the sustainability factor. Exceptions exist for those with long careers or reaching 60 with 40 years of contributions. Different rules apply to pensions based on long-term unemployment.
