Last November, the European Commission asked EU countries to adapt their pension systems to promote complementary pensions, such as retirement insurance and PPR, little used in Portugal, suggesting automatic enrollment and professional funds.
The Portuguese system, which is mainly based on the public Social Security pension, faces challenges like other EU countries such as the rapid aging of the population, future pensions tending to be lower, low adherence to supplementary plans and irregular contributory careers.
Faced with such issues, Brussels is asking Portugal and other European countries to start using automatic enrollment in supplementary pension plans, with a free exit option, which would involve companies making such plans available and workers contributing small percentages of their salary to such savings.
At the same time, the community executive wants each EU country to have a system that allows each citizen to see all pension rights in one place, which in the country’s case would imply that Social Security has a monitoring system for public pensions, but also professional, private funds and the Retirement Savings Plan (PPR).
This would allow those working in other EU countries to see everything centrally, including future projections.
The institution also wants national pension panels, which would enable governments to monitor the sustainability of the system, the adequacy of pensions and the rate of adherence to complementary plans.
At the time, a reform of professional pension funds was also proposed, and in Portugal there are few and they are small in size.
At a time when the Pan-European Personal Pension is little used in the EU, the European Commission still wants to make this package simpler and cheaper, to be an alternative to traditional PPRs if it were, for example, more beneficial in tax terms.
It is now up to Parliament and the Council to negotiate and endorse such proposals.
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