‘Retirement finances will be put under stress as a result’: Report
LISBON (Reuters) — Portugal's working-age population will fall by nearly a third by 2050, the second largest drop among the 36 member states of the Organisation for Economic Cooperation and Development, putting pressure on its pension system and economy, the OECD said.
In a report released on Wednesday, the Paris-based organisation said Portugal's population was aging quickly, leading to a substantial fall in the number of contributors to its pension system.
"Retirement finances will be put under stress as a result," it said, adding that the 30 per cent expected fall of the working-age population in Portugal compares with an average drop of five per cent in the OECD area.
Around 21 per cent of Portugal's residents are currently aged over 65, the fourth-highest proportion in the European Union.
The only country with a higher projected loss of working-age population among OECD members will be Latvia, though many other European countries, especially in southern and eastern Europe, are also facing a rapid ageing of their populations.
A severe debt and economic crisis in Portugal, which wiped out 700,000 jobs between 2008 and 2013, is also "likely to leave its mark on future pensions," the OECD said, adding that old-age social protection, the biggest share of the country's public expenditure, is likely to remain exposed to financial pressure.
To tackle the issue, the OECD said Portugal should eliminate the option for long-term unemployed people to enter retirement "very early" and simplify non-contributory benefits, among other measures.
"The focus should be on strengthening the incentives and ability of older people to stay longer in the labour market, simplifying the old-age safety-net and pension system, and improving its design to better cope with longer lives," said Stefano Scarpetta, OECD Director for Employment, Labour and Social Affairs.