The public finance council (CFP) announced yesterday that Portugal’s social security system achieved its highest budget surplus in over a decade, with a surplus of €4.059 billion in 2022. This marked an improvement of €1.711 billion compared to the previous year. Despite the ongoing impact of pandemic-related measures and the adoption of new support in response to geopolitical shock, the social security system managed to generate this surplus.
According to the CFP’s report on the budgetary evolution of social security and the civil service pension fund (Caixa Geral de Aposentações or CGA), the surplus was primarily attributed to an increase in effective revenue by €2.22 billion, surpassing the growth in expenditure, which amounted to €508 million. However, the report also highlighted the impact of Covid-19 measures on expenditure, which reached €607.4 million in 2022, with funding allocated at €616 million.
The report mentioned that the impact of measures related to geopolitical shock could not be accurately determined due to the lack of information regarding their financing. This lack of transparency raises concerns about the budgetary implementation of this sub-sector and questions whether these measures were fully financed by the state budget (OE) or not, according to the CFP led by Nazaré da Costa Cabral.
Social security revenue, excluding the European Social Fund (ESF) and the European Fund for Assistance to the Most Deprived Persons (FEAC), experienced a growth of 6.9% compared to the previous year. This growth was primarily driven by an 11.8% increase in social contributions, which was attributed to higher salaries declared to social security, job creation, and the increase in the guaranteed minimum monthly wage (RMMG) by €40. The increase in RMMG raised the minimum amount of the tax base for contributions and levies.
When adjusting for the effects of pandemic-related measures and measures addressing geopolitical shock, expenditure increased by 1.7% compared to the previous year, amounting to €1.908.8 billion. However, Excluding these measures, expenditure would have dropped by 4.7% compared to 2021.
The CFP also highlighted a 6.6% increase in spending on pensions, attributed to the exceptional pension supplement and the extraordinary pension update, as well as a significant rise of 123.1% in other benefits. The latter included measures addressing geopolitical shock, social action, parental benefits, family allowances, and sickness benefits and supplements, with growth rates ranging from 3.9% to 12.4%.
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