A Portuguese Social Security reform working group coordinated by economist Jorge Bravo has proposed automatic enrollment workplace pension plans to address a 1.9 billion euro system deficit.
The panel recommended a complementary pension scheme with contribution rates between 8% and 10%, split among employees, employers, and the state. Implementation would be gradual and phased across the country.
Participation in the complementary scheme would remain voluntary. Bravo emphasized that no one would be forced to participate and that any worker who preferred to opt out could do so. Tax incentives would be offered to workers who choose phased monthly payouts rather than lump sum withdrawals upon retirement.
State savings accounts for children
To encourage long term financial planning from an early age, the working group proposed an individual savings initiative named the Grain by Grain program. Under the scheme, the state would deposit between 5 euros and 30 euros per month into individual accounts for young people until they turn 18.
Bravo explained that every child residing in Portugal who is enrolled in the school system would be registered automatically to receive the public funding. The exact monthly deposit amount remains a political decision for ministers to determine.
Families and third parties could make additional voluntary contributions to top up the balance. Account funds would remain locked until retirement, though withdrawals would be permitted earlier in cases of severe illness or long term unemployment.
New public debt instruments
The advisory body also called for the creation of specialized public debt instruments designed specifically for retirement savings. These products would be named Treasury Bonds Retirement and Savings Certificates Retirement.
Unlike existing government debt offerings, these retirement instruments would include a reimbursement phase paid out as a temporary monthly annuity. The return on the bonds and certificates would be indexed to inflation alongside an additional interest rate.
Using real estate equity for care
The experts advocated allowing retirees to convert private real estate assets into financial resources for their later years. Property equity could be mobilized voluntarily to fund personal healthcare and long term care assistance.
Under the proposal, homeowners could access their equity through reverse mortgages or by transferring properties into government managed rental schemes. Bravo highlighted the situation of retirees who live in run down apartments in Lisbon valued at 500,000 euros while receiving only the minimum state pension.
The panel specified that accessing housing wealth through these financial mechanisms must not affect or restrict an individual's eligibility for state social benefits.
Savings scheme linked to daily shopping
To further support household financial reserves, the advisory group proposed a Consumption Savings Account that links retirement contributions directly to everyday spending.
The voluntary program would aggregate small sums generated from daily retail purchases, tax invoices carrying a taxpayer identification number, value added tax assignments, and transaction round ups. The accumulated micro savings would then be funneled directly into the consumer's dedicated pension account.
