Protection in the old-age eventuality shall be materialized through the lifetime grant of a monthly retirement pension, which aims to replace the lost work income, when the employee reaches the legally presumed age as suitable for terminating the professional activity.
The Retirement Statute regulates this eventuality for the convergent social protection scheme.
The right to retirement depends upon:
• Affiliation to the Public Employees’ Special Pension Scheme (CGA in Portuguese) made until 31 December 2005;
• Compliance with a minimum waiting period of 15 calendar years;
• Minimum legally set age.
However, when the public employee attains the age of 70 years old retirement may be compulsory and in this case compliance with a minimum period of work of 5 years shall be required.
As from January 2014 all entities, irrespective of their legal nature and degree of autonomy shall contribute monthly to the Public Employees’ Special Pension Scheme in the amount of 23.75% of compensation subject to quota deduction regarding the public employees working therein and covered by the convergent social protection scheme.
Employees with a public employment relationship admitted after 1 January 2006 are covered by the social protection general scheme for this eventuality and shall compulsorily be registered as beneficiaries in the social protection institutions such as other employees already framed by this scheme for all eventualities before that date.
In this case, the employee pays a quota in the mount of 11% on the monthly compensation to the social protection institutions, intended to ensure the right to all covered eventualities.
All services as employers are required to pay a 23.75% contribution for the social protection general scheme. Regarding employees with a public employment relationship of appointment admitted as from 1 January 2006 and those that prior to 2008 held an appointment employment relationship having then passed to the employment contract in public functions for an indefinite period of time the public employer pays 18.6% thus ensuring the unemployment eventuality that is not so subject to contribution.
The right to retirement in the social protection general scheme depends upon registration and payment of contributions as well as compliance with a minimum waiting period of 15 calendar years as general conditions. Furthermore, it also depends on the specific requirement of reaching the age of 66 years old.
The waiting period may be completed, for both schemes, with registration and contribution terms for the other scheme.
Retirement is not compulsory in the social protection general scheme.
Several changes have been introduced to the retirement pension calculation, as defined in the retirement statute, materializing progressive convergence measures with the social protection general scheme provided for in the social security framework law, of which the following are highlighted:
- The social protection general scheme calculation formula shall be applied to all beneficiaries affiliated to the Public Employee’s Special Pension Scheme after 1 September 1993;
- As from 1 January 2006 the retirement statute calculation rules shall adapt those in place for the social protection general scheme regarding the fulfilment of functions as of their entry into force;
The first aforementioned group of employees shall have their retirement pension calculated according to the social protection general scheme rules with regard to all length of service.
Concerning the second aforementioned group of employees: to those who on 31 December 2005 have not yet met all legal requirements, a calculation formula composed of two parts sum (P1 + P2) shall apply:
- P1 corresponding to the length of service performed until 31 December 2005 by employees registered before 1 September 1993, calculated according to the undermentioned formula, applied on 80% of the relevant compensation (R) defined for the retirement statute purposes;
- And P2 corresponds to the length of service performed after that date, calculated as per the social protection general scheme rules.
Calculation formulas are as follows:
P1 = R x T1 / 40
R – Refers to 80 % of relevant monthly compensation received until 31 December 2005 (revised by applying a coefficient corresponding to the consumers’ price general index) to which a maximum limit of 12 times the social support indexation (SSI) amount is applicable; and
T1 – Refers to the number of years of service performed until 31 December with a maximum limit of 40 years;
P2 = RR x T2 x N
RR – Refers to the reference compensation, based on the highest annual compensations received as from 1 January 2006 (corresponding to the length of service needed to attain the maximum limit of 40 years of service which shall be added to the length of service performed until 31 December 2005);
T2 – Refers to the annual calculation rate for the pension that is 2%;
N – Refers to the number of calendar years with contribution density (120 days with registered compensations) completed as from 1 January 2006 onwards, in order to complete the maximum limit of 40 years when added up to the ones registered until 31 December 2005.
The social security general scheme old-age pension formula shall be applicable to P2 calculation, namely, to the annual pension calculation rate.
The pension formula composed of the two parts sum (P=P1+P2) shall be still multiplied by the sustainability factor for the year when retirement is requested.
There is still the possibility of another retirement form – early retirement applied in situations when the employee shall not complete the legally required age for old age retirement, but meets other requirements.
As from 2009 only may be requested provided that at the time an employee reaches the age of 55 years old and he/she has, at least, 30 years of length of service (contributions).
The early retirement calculation shall be based on the above described formula for each possible case but a reduction factor – “penalty” – corresponding to 0.5% for each missing month for the age legally established for old age retirement is applied to the amount calculated for the contributor.
According to the general rule retired and pensioners by the CGA or reservists’ public employees or those ones with equivalent status are prevented from fulfilling public functions or providing any work to public administration except for cases when a special law so allows it or when an authorization from the Government members responsible for finance and public administration areas is issued grounded on exceptional public interest.
This rule shall apply to the following services:
- All services and activities, irrespective of its term, regularity and when payed, compensation form and all contract types, irrespective of its nature, public or private, work performance or service delivery; and
- All central, regional and local administration services, public companies and all entities belonging to the regional and local public corporate sector and other legal persons under public law.
In any case, whatsoever, the possibility to perform public functions is absolutely blocked regarding public employees to whom a disciplinary penalty for compulsory retirement has been applied or when the grounds for retirement has been occupational disability; however, those public employees retired who have resorted to legal mechanisms of early retirement may be authorized to fulfil functions as per the aforementioned terms and when compliance with the requirements established by order issued by Government members responsible for finance and public administration areas is verified.
This regime applies to retirement pension’s beneficiaries of the general social security regime, as well as, to pensions or complementary assistance beneficiaries paid by any public entities, irrespective of their institutional nature, corporate or associative, territorial scope and autonomy degree.