During a parliamentary hearing on the proposed State Budget for 2026 (OE2026), Joaquim Miranda Sarmento noted that he had not yet read the PS proposal in detail, having only seen descriptions in the media.
From what he understood, “the proposal suggests two seemingly contradictory things: it states that if there is an extraordinary supplement in 2026, it must become structural in 2027, while also stating that in 2027 this will be done through the non-reduction of IRC.”
The minister remarked that the PS seeks an “extraordinary increase in pensions in 2027 through the non-reduction of one percentage point of IRC,” noting the irony that the initiative was delivered on the day the IRC reduction was published in the Diário da República.
In one of the amendments presented today, the Socialist Party proposes that any extraordinary supplement paid to retirees in 2026 be converted into a permanent increase, allowing it to count for pension calculation in 2027.
The socialist bench stipulates that the update be “fully funded by State Budget funds” and ties this conversion to the structural margin of the pension system.
It further proposes that, if necessary to finance the Social Security Financial Stabilization Fund for this increase, a compensation be made through “an adjustment of one percentage point in IRC rates.”
“In 2026, any extraordinary supplement, whether one-time or occasional and regardless of its amount, granted to pensioners based on the available budgetary margin, should be converted into an extraordinary pension update for updating its value, depending on the structural margin evolution of the system and, if necessary, compensating with a one percentage point adjustment in IRC rates for additional State Budget funding to the Social Security Financial Stabilization Fund,” the initiative states.
The general IRC rate will decrease in 2026 to 19%, to 18% in 2027, and to 17% in 2028, according to the law approved by parliament on October 17, 2025, and published today in the Diário da República.
In addition to the general rate reduction, the IRC decree stipulates that from 2026, the profits of small and medium-sized enterprises (SMEs) and medium-capitalization companies will be taxed at a rate of 15% on the first 50,000 euros of taxable income, representing a one-percentage point reduction from the current rate of 16%.
