Find out if you can get a pension in Portugal and the conditions and process for claiming a Portuguese pension.
Portugal is a popular destination for its great places, food and festivals, but foreigners retiring to Portugal should first check if it is a financially viable option. Portugal’s pension typically covers all working residents in the country, regardless of nationality, although conditions apply to determine if and how much Portuguese pension you will receive.
If you not are not covered by Portugal’s pension system, it may be possible to access or transfer an international pension in Portugal, for example, via an offshore pension scheme.
Portugal’s pension system
The Portuguese pension system consists of a mandatory state pension scheme that exists alongside much smaller voluntary occupational and private savings arrangements. Portugal’s pension system is covered by the Centro Nacional de Pensoes (CNP) department of Portugal’s Social Security organisation (Segurança Social).
The Portuguese state pension falls under two categories:
- there is an earnings-related, contribution-based pension that covers everyone in the workforce who has made sufficient contributions;
- there is a means-tested, minimum-rate ‘social pension’ for those who haven’t participated in the workforce or haven’t made sufficient contributions.
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, provided they have made the necessary contributions.
Only a small percentage of the population have voluntary occupational or private pensions in Portugal, although many expats who retire to Portugal can transfer private pensions via international schemes.
Who can claim a pension in Portugal?
To qualify for a contributions-based, old-age pension in Portugal, you must have worked and paid social security in Portugal for at least 15 calendar years, though these don’t have to be consecutive. A ‘calendar year’ qualifies as having worked at least 120 days within that year. Any years with less than 120 days worked can be combined to count as a full calendar year towards your Portuguese pension. Read more about social security in Portugal.
Foreigners have equal rights 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) and give this to employers. This number will be needed when you claim your Portugal pension, and for any other social security benefits.
Those in self-employment can also claim a pension in Portugal but need to make their social security contribution arrangements themselves.
Retirement age in Portugal
The official retirement age in Portugal rose to 66 years and 3 months for both women and men on 1 January 2017. To plan for the slowly ageing population and increasing life expectancy, the government will continue to adjust the retirement age in Portugal in the following years in line with life expectancy statistics.
It is possible to take early retirement in Portugal before age 66 without penalty if you make at least 40 years of contributions. It is also possible to defer receiving your pension in Portugal until you reach 70. However, the calculated pension you receive will be reduced on a sliding scale if you retire early or increased likewise if you retire later. Determined on a case-by-case basis, exceptions for early retirement without penalty may be granted in certain situations, such as:
- Long-term involuntary unemployment
- Specially protected professional activities
- Situations determining specific protection measures for activities or enterprises, due to short-term economic factors.
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 persons who received benefits can retire and claim their Portuguese pension at age 62 provided they had paid at least 15 years of social security contributions and were at least 57 years of age when they lost their job; if they paid at least 22 years of social security and were fired by 52 years old, a Portuguese pension can be claimed at as early as 57 years of age.
It must be noted, however, that 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 here.
Read more about the implications of retiring in Portugal.
Portuguese pension rates and contributions
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.
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 €254 per month with 15 years of contributions and €379 with at least 31 years of contributions.
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.
Non-contributory pension in Portugal
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.
The social old-age pension in Portugal is paid at a flat-rate of €195.40 per month. There is also a supplement of €17.54 for those aged up to 60 years and €35.06 for those older than 70 years. Long-term care supplements are also available, if necessary.
Company and private pensions in Portugal
In addition to the Portuguese state pension, there are private pensions in Portugal in the form of voluntary occupational plans and personal saving arrangements.
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.
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 pension tax on international pensions
Portugal has tax treaties with EU member countries (see below), as well as social security agreements with some non-EU countries, which enable foreigners to avoid double taxation on their pension payments. In such cases, once you become a resident in Portugal you will typically only be subject to Portuguese taxes, which may be lower than back home.
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, this is possible 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.
Portugal’s tax-free pension scheme
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.
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 a NHR, you have to meet certain criteria. More information is available in our guide to retiring in Portugal.
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).
Applying for a 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 CNP. You will need to present your Social Security Number.
Portuguese pension terms
- Old-age pension: pensão de velhice
- Survivor’s pension: pensão de sobrevivência
- Invalidity pension: pensão de invalidez
- Long-term care supplement: Complemento de cuidados prolongados
Survivor’s pension in Portugal
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)
- Descendents, 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.
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.
- Portuguese Social Security website
- Portuguese National Centre for Pensions (CNP)
- EU report on social security rights in Portugal
- Information on state pensions abroad for EU citizens