Portugal
Parliament approves
new social security
law
After a lengthy consultation period,
Parliament approved a new basic law
No. 17/2000 in July, which outlines
new principles for the country's social
security system. The main objectives
of this revised system are to improve
levels of protection, manage the
system more efficiently and guarantee
its financial sustainability. The changes
will be phased in and people in the
current system will be governed by
rules set up by the law of 1984. A
new joint Social Security Council will
be a channel for social dialogue.
In essence, the social security
system appears to continue in the
public domain for the foreseeable
future. Employers and employees will
continue to pay contributions at the
same level as at present, although
2-4% of the employee contribution
will be placed in a financial
stabilisation fund for contingency
purposes. It is probable that there will
not be a ceiling on contributions and
any private pension funds will be
additional to State pensions. The
emerging pension entitlement could be based on 40 years' contributions
and the amount calculated on lifetime
earnings, however this remains to be
defined. The change to lifetime
earnings will be on a graduated basis.
The reforms have come under
some criticism from employers as they
provide little scope for the creation of
private pension schemes.
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