Find out about how pensions in Portugal work when you’re an expat, the conditions and process for claiming a Portuguese pension, and what kind of pensions are available in Portugal.
Claiming a pension in Portugal should be possible for all working residents in the country, regardless of whether you’re Portuguese or not. However, certain conditions will apply, and the amount you’ll receive can vary.
If you not are not covered by the Portuguese pension system, it may be possible to access or transfer an international pension in Portugal, for example, via an offshore pension scheme.
This guide to pensions in Portugal includes:
- The Portuguese pension system
- Who is eligible for pensions in Portugal?
- Pensions in Portugal for expats
- Portuguese pension rates and contributions
- Supplementary pensions in Portugal
- Non-contributory pensions in Portugal
- Other pensions in Portugal
- Applying for your Portuguese pension
- Pensions advice in Portugal
- Useful resources
The Portuguese pension system
The Portuguese pension system is one of the most generous in the world. The OECD’s 2017 Pensions at a Glance report identified the country’s average 95% pension contribution to be the fifth highest out of its 35 member countries.
The Portuguese pension system consists of a state pension scheme that’s provided by the government, alongside much smaller voluntary occupational and private pension options.
The Portuguese state pension falls into two categories:
- an earnings-related, social security contribution-based pension that covers everyone in the Portuguese workforce who has made a certain amount of contributions;
- a means-tested, minimum-rate ‘social pension’ for those who haven’t participated in the workforce, and/or haven’t made sufficient social security contributions to qualify for the other kind of state pension.
Payment benefits under the Portuguese state pension are linked to life expectancy and indexed to consumer price index changes. Self-employed workers are also covered by the Portuguese state pension, as long as they’ve made the necessary contributions while they’ve been working.
Only a small percentage of the population have voluntary occupational or private pensions in Portugal, but many expats who retire to Portugal can transfer private pensions via international schemes.
Pension age in Portugal
In 2019 and 2020, the official retirement age in Portugal is 66 years and 5 months for both men and women.
To plan for the slowly ageing population and increasing life expectancy, the government will continue to adjust the retirement age in Portugal in years to come, in line with life expectancy statistics. The pension age is due to reach 67 in 2029.
It is possible to take early retirement in Portugal from the age of 55 if you’ve made at least 30 years of contributions, however the amount you’ll be paid will be reduced for every extra year you receive payments.
It is also possible to defer receiving your pension in Portugal until you reach 70. For each year you defer, your pension payments will increase.
People in certain circumstances will be able to retire early without having reduced payments. These include:
- Being in long-term involuntary unemployment
- Specially-protected professional activities
Under the Portuguese pension system, long-term unemployed workers can only apply for early retirement at the end of their unemployment benefit. Those who don’t receive this allowance, and have been unemployed for more than one year, will not typically have the right to early retirement.
Unemployed people who received benefits can retire and claim their Portuguese pension at 62, provided they have paid at least 15 years of social security contributions while they were working, and were at least 57-years-old when they lost their job.
If they paid at least 22 years of social security and were fired when they were 52 or over, they could claim their pension from 57.
However, those who access their pension before they turn 62 will be subject to penalties – typically in the form of lower Portuguese pension payments – which are outlined on advice site Economias (link in Portuguese).
Read more about the implications of retiring in Portugal.
Who can claim a state pension in Portugal?
To qualify for a contributions-based old-age pension in Portugal (link in Portuguese), you must have worked and paid social security in Portugal for at least 15 calendar years, though these don’t have to be consecutive.
To work a full ‘calendar year’ means you must have worked for at least 120 days within that year. Any years where you’ve worked for less than 120 days can be combined to count as a full calendar year towards your Portuguese pension.
Foreigners have an equal right to claim a pension in Portugal, provided they have made the necessary contributions for at least 15 years.
It is the employer’s responsibility to register workers and ensure that the required pension contributions are made. You will need to apply for a Social Security Identification Number (Número de Identificação da Segurança Social; link in Portuguese) and make sure you give this to your employers.
You’ll need this number when you claim your Portuguese pension, and if you want to claim any other social security benefits.
If you’re self-employed, be aware that you’ll need to sort your social security number and contributions for yourself.
If you’re planning to retire in Portugal as an expat, you should check if any deals or treaties are in place with your home country as it could affect what tax you need to pay, and whether you can transfer pensions you’ve already paid into abroad.
Portugal has tax treaties with EU member countries, as well as social security agreements with some non-EU countries.
Social security agreements enable foreigners to avoid double taxation on their pension payments. So, once you become a resident in Portugal you will typically only be subject to Portuguese taxes, which may be lower than in your home country.
As residents in Portugal are taxed on their worldwide income, private pensions paid from abroad may also be liable to Portuguese taxes. It may be possible to transfer private pension earnings without incurring charges via an offshore pension scheme.
In the UK, you may be able to do this through a Qualifying Recognised Overseas Pension Scheme (QROPS) commonly used by UK citizens who emigrate with private pension funds.
Before retiring to Portugal, you should check whether your home country has a bilateral tax agreement with Portugal, and it is always advised to consult a professional to ensure you understand the tax and inheritance implications.
Read more about social security in Portugal and Portuguese inheritance law, taxes and wills in Portugal.
QROPS: transfer and consolidate your UK pension
Expats moving abroad from the UK may be able to transfer their pensions into a Qualified Recognized Overseas Pension Scheme (QROPS). QROPS allows expats to consolidate their pensions into one plan. This helps them manage their retirement funds more easily and avoid currency fluctuations.
There are many advantages to QROPS, however they are not suitable or available to all UK pensioners, so we highly recommend you take advice from an expert financial adviser such as AES. Read more in our full guide to QROPS.
Non-habitual residency in Portugal
In a bid to attract foreign pensioners, the Portuguese government offers the option for foreigners to apply to live in Portugal as a non-habitual resident (NHR). This is Portugal’s tax-free pension scheme that allows foreigners to take pension income under favourable tax arrangements.
First introduced in 2009, the scheme has proved popular, with a report in February 2019 claiming 9,589 pensioners are benefitting from it – in addition to many more individuals who are still in work.
Those granted NHR status will be given a tax exemption on all forms of taxable income they receive from abroad, including pensions and lump-sum withdrawals, for up to 10 years.
By claiming a tax-free pension in Portugal, certain foreigners can manage considerable tax savings, particularly if they benefit from a double taxation scheme. It is always advisable to consult an expert to there are no negative implications. To qualify as an NHR, you have to meet certain criteria.
If you have moved to Portugal from another EU country, your collective social security contributions can count towards qualifying for a pension in Portugal.
For EU citizens and long-term residents, every member country where you worked and made contributions for at least one year can count towards qualifying for an old-age pension in each country, although typically at a pro-rata rate for only the years you worked.
You will start receiving these pensions once you reach the legal retirement age in each country, so the amount you receive may vary if these retirement ages are staggered. You need to make an application for a Portuguese pension with the CNP through the Seguranca Social (Portuguese Social Security).
More information is available in our guide to retiring in Portugal.
Earnings replacement payments under the Portuguese state pension are relatively high, at approximately 69% of earned income. However, average earnings in Portugal are fairly low compared to other EU countries – reportedly €17,521 a year.
The Portuguese state pension rates depend on earnings and amount of contributions made, with Portugal’s pension rates varying from 30–92%.
The minimum contribution-based pension rate is €286.76 per month with 15-20 years of contributions, €316.45 per month with 20-30 years of contributions, and €395.57 with contributions of 31 years or more.
Social security contributions toward the Portuguese state pension amount to around 11% of the employee’s wage, with employers contributing another 23.75%.
This includes contributions towards survivor and disability pensions in Portugal. For those working in the public sector, pension contributions amount to a minimum of 3%. The contributions rate for those who are self-employed is 29.6% of earnings.
Portuguese pension payments are made monthly with additional payments made in July and December, meaning that pensioners receive 14 pension payments a year.
In addition to the Portuguese state pension, there are private pensions in Portugal – voluntary occupational plans through your employer, and personal saving arrangements that you can set up privately yourself.
Occupational pension plans are not that common and cover only an estimated 3.7% of the workforce in Portugal. Only 1% of companies in Portugal operate a pension plan.
Most company pensions are paid using a pension fund arrangement, with some smaller companies using an insurance-based scheme.
Pension funds in Portugal are managed by regulated pension fund societies and can be either a closed fund (limited to a single employer or a small number of employers, usually linked to a trade union agreement) or an open fund (where money is accepted and invested from various external pension plans).
Investment for pension funds in Portugal is regulated, with a maximum equity exposure of 55% and a maximum 60% investment in bonds.
Tax on pensions
The government allows 25% of employee contributions to private pensions in Portugal to be tax deductible, and employer contributions are tax deductible up to 15% of salary. However, future payments from a pension fund in Portugal will be taxable if contributions have been tax-exempt.
If contributions have been taxed, only the interest earned on the original contribution will be taxed as pension income.
Some small and medium-sized companies use direct insurance schemes rather than pension funds in Portugal. These are either endowment funds or group annuity contracts. The tax treatment is the same as for pension funds.
Portugal also has a social old-age pension, which is means-tested.
It is a Portuguese pension paid to those with minimum resources who have no coverage under any contributory scheme.
To qualify for this pension in Portugal, you must have been a resident in the country for at least three years and your monthly income must be less than 40% of the social pension benefit rate for a single person or 60% of the social benefit rate for a couple.
This equates to single people earning an income of €171.54 or less per month, or €257.34 or less a month as a couple.
The social old-age pension in Portugal is paid at a flat-rate of €210.32 per month. There is also a supplement of €18.31 for those aged up to 70, and €36.60 for those older than 70 years. Long-term care supplements are also available, if necessary.
A survivor’s pension in Portugal can be paid out to a spouse or children under 18 years (or under 27 years if studying, or no limit if disabled) if the deceased was receiving or entitled to receive a contributory-based, old-age or disability Portuguese pension.
A number of relationships can be considered, judged on a case-by-case basis:
- Spouse and former spouses
- Someone who lived in an identical situation to that of a spouse for considerable time (ie. two years)
- Descendants, including newborn and fully adopted children
- Ascendants for which the deceased beneficiary was responsible, if no spouse, former spouse or descendent is entitled to the same pension.
The survivor’s pension in Portugal amounts to 60% of the deceased’s pension, or 70% if there is a divorced spouse who is also eligible. In 2019, the widow’s pension is €126.19 per month.
The orphan’s pension in Portugal is 20% for one child, 30% for two children or 40% for three or more surviving children. Additional benefits may be paid to surviving parents or grandparents.
The total amount of benefits paid out cannot exceed 100% of the deceased’s pension. In exceptional cases, 110% may be paid out where a divorced ex-spouse is also entitled to a survivor’s pension.
A funeral allowance may also be awarded to family members of the deceased beneficiary who are entitled to the survivors’ pension, with no requirement for a qualifying period.
Disability pension in Portugal
An invalidity pension – or disability pension – is awarded to employees who have been confirmed permanently unfit to work, due to a non-occupational cause. A disability pension in Portugal can be paid out if the recipient has made total contributions of at least three years (for full disability) or five years (partial disability).
The rates for this pension are calculated in the same way as for an old-age pension. There is also a means-tested social disability pension for those who do not qualify for the contribution-based pension.
A long-term care supplement may also be awarded to social security pensioners, who are dependent for meeting their basic daily needs. The degree of dependency is considered when calculating the amount of payment or support required.
Applying for your pension in Portugal
If you are a tax resident in Portugal, you should automatically receive your Portuguese pension once you reach retirement age.
If you would like to take early retirement, defer your retirement or check any details concerning your Portuguese state pension, you will need to contact the Centro National Pensoes (CNP) – link in Portuguese.
You will need to present your Social Security Number, and fill out a number of official forms when you want to start claiming your pension.
It’s always advisable to seek professional advice from a financial adviser or your local pensions office. As an expat, it’s good practice to seek advice in all countries where you have participated in pension schemes, or consult an international advisor, to ensure you maximise your pension income and avoid unnecessary tax penalties.
If you are eligible for a Portuguese state pension, you will begin to receive it automatically once you reach state pension age. It may be possible to begin claiming it earlier, or defer and have it paid later – but you will need to contact the Portuguese social security authority.
If you have a Portuguese workplace or private pension, you should allow yourself plenty of time to contact your pension provider to ensure you start getting income when you reach retirement age.