An analysis of social security microdata for 2024 conducted by central bank economists reveals a significant disparity in pension distribution. Half of the elderly pensioners under the general regime receive less than 462 euros, while 5% receive more than 1,685 euros.
“The proximity between the average pension and the 75th percentile indicates that most pensioners earn significantly less than the average, reflecting an asymmetric distribution concentrated at lower levels,” states the text prepared by Cláudia Braz, Sharmin Sazedj, and Lara Wemans, to be included in this month’s Economic Bulletin.
The analysis also examined gender differences, noting that women experience less variability and generally lower average levels.
Overall, there were 2.5 million elderly pensioners from public systems, with two million belonging to the Social Security system and 440,000 to the Caixa Geral de Aposentações (CGA).
In 2024, the average age of pensioners was 75 years, with women being 15 months older than men on average, “reflecting a higher life expectancy.”
The average old-age pension for women was 490 euros, compared to 812 euros for men. The gender difference, around 40%, decreases to 28% when combining old-age and survivor pensions.
By age group, the lowest average pensions are among the older age groups, with pensioners under 65 years having an average pension near 770 euros, which decreases to 537 euros for those over 80 years old.
“This profile is likely associated with the increase in the length of contributory careers and declared incomes of new pensioners,” the bulletin notes.
Data further shows that in 2024, 40% of all elderly pensioners, or 804,000 individuals, were receiving the minimum pension, an indicator calculated based on the number of calculated years.
The analysis also notes a gradual decrease in the gender gap in recent years, although differences between men and women persist. This narrowing is attributed to reduced salary disparities, increased female labor market participation, and lengthier contributory careers, according to the authors.
The authors also highlight that penalties applied to early retirement have contributed to an increase in the retirement age, which rose from 64.7 years in 2019 to 65.4 years in 2024, despite the legal age remaining at 66.3 years.
However, despite this convergence between the two indicators, 38% of new pensioners retired before the legal age, compared to 32% who did so at the legal age and 31% after the legal age.
Among new pensioners, 10% continued working, primarily among those with higher pensions.
The data analyzed reveals that retired individuals continuing to work received an average of 933 euros, compared to 591 euros for those who did not work after retirement.
Fewer than one in four new pensioners who stopped working after retirement received more than the minimum wage, while more than half of those who continued working had pensions equal to or greater than one thousand euros.
Regarding the replacement rate, related to the ratio between the last salary and the pension, evaluating the maintenance of income level after retirement, it stood at nearly 70%, with women (67%) averaging lower than men (74%).
Compared to the last salary, the replacement rate is higher the lower the salary, moving from 77% for salaries up to 900 euros to 61% for salaries above 2,500 euros.
“This behavior reflects, on the one hand, larger differences between the initial and final career salary in higher incomes and, on the other hand, the redistributive effect of the pension calculation formula, which proportionally favors lower salaries,” the authors note.
The authors also indicate that when considering the total income of pensioners, including work income, social benefits, rents, and capital income, deducted from income taxes, it is about 18% lower than that of employees. However, this difference decreases to 10% when adjusted for household composition, as pensioners typically have fewer children and young dependents.
“When compared with the general population, not just employees, the average total household income per equivalent adult of Portuguese pensioners does not differ from the rest of the population,” they add, contrasting with a decline of over 10% in the eurozone average.
At the base of the distribution, pensioners have an income about 8.1% higher than the rest of the population, justified by the combination of minimum pensions with the Solidarity Supplement for the Elderly and other benefits.
[Updated at 3:56 PM]
