“The supplement will cost 400 million euros; we prefer this redistribution mechanism to a permanent pension increase because it generates rigid structural expenditure,” stated Joaquim Miranda Sarmento at the press conference following the Council of Ministers.
The minister emphasized that economic activity generates a “budget dividend,” which will have the “first priority of reducing public debt,” but the Government also intends to “use part of this dividend to help those who have greater difficulties, who no longer have other sources of income and have very low-value pensions.”
Regarding the budget margin to apply this measure, Miranda Sarmento highlighted that “at present, the available information indicates a robust, comfortable budget situation,” adding that this year there are “stronger data on budget execution earlier than last year.”
The Government estimates a surplus of 0.3% of the Gross Domestic Product (GDP) this year, despite institutions such as the Bank of Portugal estimating a deficit either this year or the next.
The minister also confirmed that the supplement will not be subject to withholding tax on IRS, meaning the net amount received by each pensioner will correspond to the gross amount.
However, for the final IRS calculation, the amount will count as income, adding to the remaining values for the application of IRS rates.
At the press conference, Miranda Sarmento explained how the supplements will be treated fiscally in the two instances, withholding and tax settlement.
“This supplement, like all income from all sources, is then included for IRS purposes; it could not be otherwise. However, it will not have withholding tax. Also, because a large part of these pensioners, given their low pension level, do not pay IRS, we decided to exempt this supplement from withholding,” explained the minister.
The supplement will be paid in September and will amount to 200 euros for pensions up to 522.50 euros, 150 euros for pensions between 522.50 euros and 1,045 euros, and 100 euros for all pensions between 1,045 and 1,567.50 euros, as announced by the Prime Minister during the State of the Nation debate on Thursday.
The allocation of this supplement “is not accounted for in the assignment of the Solidarity Supplement for the Elderly (CSI) and does not require any request from the beneficiaries,” clarified the Ministry of Labor, Solidarity, and Social Security, in a statement sent after the Council of Ministers briefing.
This supplement covers pensioners of Social Security, the Caixa Geral de Aposentações (CGA), and the banking sector, a total of two million and 300 thousand pensioners.
The allocation of this supplement, whose decree was approved today and already promulgated by the President of the Republic before the press conference following the Council of Ministers, is similar to that assigned in 2024, which cost 422 million euros.
[News updated at 5:46 PM]
