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Proposal of Law No 236/XII

Exhibition of Motifs

The participation of Portugal in the European Union and in the euro area requires the fulfilment of

Required budgetary requirements, as laid down in the Treaty on the Functioning of

European Union, protocol and regulations developing the Covenant

Stability and Growth and the Treaty on Stability, Coordination and

Governance in economic and monetary union, which includes in Title III the provisions

on the budgetary pact. These European commitments establish, in particular, the

respect for the maximum reference values of 3% of the Gross Domestic Product (GDP) for

budget deficit and 60% of GDP for the public debt ratio, and the obligation

to ensure a balanced or surplus budgetary situation. In the transition period

for these objectives, the Portuguese State must also define and perform a trajectory of

consolidation to ensure the convergence of the structural budget balance for the objective of

medium term, under penalty of activation of automatic correction mechanisms. The

public finance sustainability commitments are already incorporated into the Law of

Budgetary Framework (Law No 91/2001 of 20 August), through the seventh amendment

(Law No 37/2013, of June 14) approved by the parties of the arc of governance,

the ratification of the Treaty on Stability, Coordination and

Governance in economic and monetary union.

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Failure to fulfil the deficit and debt limits may, as a result of the strengthening of the

economic governance rules in the euro area, determine the application of sanctions

in respect of the non-compliance States. These pecuniary sanctions can reach 0.5%

of GDP and are applied according to an inverted qualified majority mechanism which facilitates

the adoption by the European Council of the sanctions proposed by the European Commission,

as guardian of the Treaties. Thus, in the current context, and even after completion

the formal programme of economic adjustment agreed with the European Commission, the

European Central Bank and the International Monetary Fund

correction of budgetary imbalances are reinforced, as well as, and

Above all, the provisions in the monitoring and prevention of new

imbalances are significantly intensified.

The responsibilities assumed in the European framework adds the relevance of sustainability

of public finances and financial stability for economic growth

sustained. The budgetary discipline, in particular, plays a decisive role in this

to the extent that it is one of the essential pillars for an economy

dynamic and competitive.

First of all, a balanced budget is a decisive contribution to stability

financial. The sustainability of public finances conveys a sign of tranquillity to

creditors, with regard to the ability to respect the commitments made. This

peace of mind, in turn, translates into lower and more financing costs

stable. In this way, it becomes possible to use the markets to fill in the

financing needs under less favourable circumstances and accommodate

subsequently the payment of interest in more favourable circumstances. This table

allows to avoid systematic tax increases, contributing to the creation of a

more stable and therefore more attractive business environment,

creating conditions of predictability for families.

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Budgetary discipline, in particular with regard to the holding of public expenditure,

allows the State to use only the resources necessary to carry out the function

of redistribution of wealth and to ensure citizens the provision of public services

essential, thus creating the bases for a lower tax burden and a greater release of

resources for the economy, in particular for productive private investment, which by

Its turn enhances the lasting creation of employment and new resources.

This bill contributes decisively to the sustainability of finances

to ensure compliance with the obligations arising from participation

of Portugal in the European Union and in the euro area and contribute to the transition

for sustained economic growth.

As part of the importance of budgetary discipline, this bill of law

The proposal for a solution to the most important challenge

puts the public social security system – that of its sustainability – especially in

in respect of pension schemes.

The Portuguese public pension system consists of the pension system and the

Converging social protection regime, also covering the regime managed by the Box

Predictment of Lawyers and Requesters. The system is managed in distribution, and

pensions currently in payment are supported by the contributions of workers

in the active and their employers and by transfers of the State Budget. This

financing model, which underlies an implicit contract based on the principle

of solidarity between generations, presupposes that the active generation supports the payment of

pensions of retired or retired generation. Thus, this model is necessarily

affected by the demographic reality resulting from the decrease in the birth rate and the

increase in average life expectancy which has the effect of degrading the ratio between

assets and pensioners. Thus, the principles of trust and solidarity inherent in the

regular operation of the system should be cautioned between generations, ensuring that

the coming generations will have the system working equally reliably against their

contributions, such as the beneficiary generations present.

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The sustainability of this funding model depends on the evolution of several factors,

fundamentally of the ability of future generations to assume the burdens with

pensions from previous generations. A pension system based on the logic of

distribution should effectively evolve in order to ensure its financial sustainability

permanent. Thus, the current and future beneficiaries of this system – which are the

key stakeholders in their financial sustainability – should participate in this effort.

Recognise that the effort requested by current pensioners is essential to safeguarding their

own expectations, which can only be adequately protected in a context of

sustainability of the pension system to which they belong.

Portugal faces sustainability difficulties in the public pension system, which

is largely the evolution of longevity, but it is also structurally

vulnerable to the other demographic and economic variables.

The Extraordinary Solidarity Contribution (CES), created by Law No 55-A/2010, of

December 31, which approved the State Budget for 2011, aimed to strengthen the

sustainability of the pension system, covering monthly incomes of more than €

5,000. The decision then sought to reduce the net weight of this expenditure in the budget

State. Reduction of pension expenditure was also introduced in the original version

in the framework of the Economic Adjustment Programme. A

The aim was to reduce, with progressive rates, pensions above € 1 500 per month.

Faced with the Judgment of the Constitutional Court No 862/2013 of 19 December, published

No Diary of the Republic, 1st series, No. 4, of 7 January 2014 on the convergence of

general social security regime and the convergent social protection regime and having

the need to ensure compliance with the 4% GDP limit for the deficit

2014 budget, the Government introduced changes to the drawing of the ESC, in particular

as regards the decrease in the lower limit from which the measure is applied and the

change of the two upper limits.

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However, it is important to note that the ESC is a measure of character.

transitional. Its exceptionality implies continuous work for its

to be replaced by long-lasting measures which are at the same time fair, which allow

ensure intra- and inter-generational equity, and which produce immediate effects. Tai

measures should also prevent the worsening of the current situation.

In this context, the Government has been developing structural measures with a view to

to ensure the sustainability of public pension systems and to replace the ESC.

The contributions made were based on the concerns expressed in the abovementioned

Judgment of the Constitutional Court with a view to the convergence inserted in a model

structuring, proportional and comprehensive, where the rights acquired, as well as rights

in training must be safeguarded.

Following these work, the Government invented various solutions, described in detail

in the Budget Strategy Document for 2014-2018.

These include the contribution of sustainability under this bill.

This contribution applies to the beneficiaries of pensions for public schemes

more than € 1 000 monthly. Cumulatively, pensions over € 3 500 will be

contributions of 15% on the amount exceeding 11 times the value of the

Indexing for Social Support (IAS) but not exceeding 17 times that value, and 40 %

over the amount exceeding 17 times the value of the IAS. This surcharge applies to

higher level will be regulated in autonomous diploma and will only operate fully in

2015, since it is proposed to reduce these rates by 50% in the year 2016 and its

extinction in the year 2017.

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By securing a level of exemption and progressiveness, it is attentive to equity. By extending

the scope of the compensatory measures for public pension schemes, and the

workers in the asset and contributors in general – through marginal changes

proposals for the contribution of the worker to social welfare systems (0.2 points)

percentages) and the normal rate of the Value Added Tax (0.25 points)

percentages), the latter with consignment of the respective income to the pension system –

the distribution of the effort required to ensure sustainability

of the system. It should be recalled that the overall budgetary impact of the introduction of the

sustainability contribution, increased worker contribution to the

social welfare systems and the increase in the normal value tax rate

Added compensates the estimated impact for the ESC in 2014, confirming as soon as

there is no added contributive effort in 2015, but only one

redistribution of the same.

It is considered that the set of measures presented in the framework of pension reform

contributes decisively to the sustainability of the system. It adds that the solution

in the present proposal of law it appears more balanced and the will

to provide greater predictability, stability and security for system pensioners

social security. It is also understood that the redistribution of contributive effort

so operated corresponds to the meaning of the Judgment of the Constitutional Court

No. 862/2013 of 19 December.

With the measures resulting from this proposal of law, in all systems, they are

wholly exempt from any contribution more than 87 % of pensioners. The concern

to protect and help those who have most difficulties has been constant and, for about one

million pensioners – about 40 % of the total social security – were updated

minimum, social and rural pensions.

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Moreover, all pensioners will have a higher income than that which resulted from the

application of the ESC, thus substantially recovering purchasing power. In fact,

sustainability contribution now proposed, although with some progressivity,

will require a smaller contribution effort to pensioners. Keeping the safeguard

for equal or lower public pension income € 1 000 monthly, the base rate –

that was 3.5 % – will be 2 % for pensions up to €2 000, from 2 % to 3.5 % for pensions between

€ 2 000 and € 3 500, and 3.5 % for pensions above that value.

It stresses the matter, at the headquarters of the legislative process in the Assembly of the Republic,

the self-government bodies of the Autonomous Regions, the Order of

Lawyers and the House of Requesters.

So:

Pursuant to the d) Article 197(1) of the Constitution, the Government shall submit to the

Assembly of the Republic the following draft law, requesting priority and urgency:

Article 1

Object

1 - This law creates the contribution of sustainability (CS) and adjusts the contribution rate

of workers of the social security system and the protection regime

converging social, respectively, in the Code of Contributive Regimes

Social Security, approved by Law No 110/2009, of 16 of

September, and Decree-Law No. 137/2010, of December 28.

2 - This law further amends the Value Added Tax Code, approved

by Decree-Law No 394-B/84 of 26 December and Decree-Law No 347/85 of 23

in August, with the respective revenues added to Social Security and the Cashier

General of Retirements, I.P. (CGA, I.P.).

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Article 2

Scope of application of sustainability contribution

1 - CS covers all pensions paid by a public social protection system

a single holder irrespective of the underlying ground of his award.

2 - For the purposes of the preceding paragraph, pensions are understood in addition to the

pensions paid under the different public social protection schemes, all

lifetime cash benefits due to pensioners, pensioners or pensioners

the scope of supplementary schemes, regardless of their designation,

In particular, pensions, grants, subsidies, income, insurance, and

lifetime benefits due by termination of activity, processed and put to

payment by the following entities:

a) Social Security Institute, I.P. - National Pension Centre (ISS, I.P./CNP)

in the framework of the social security system;

(b) CGA, I.P.;

(c) CPAS in the framework of the social protection regime itself.

Article 3

Negative delimitation of the scope of the contribution

sustainability

The following benefits are not covered by the preceding Article:

a) Corresponding compensatory allowances for the disabled

military, covered by Decree-Law No 43/76 of 20 January, by

Decree-Law No 314/90 of 13 October amended by Decree-Laws

n.os 146/92, of 21 July, and 248/98, of 11 August, and by Decree-Law

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no. 250/99, of July 7;

(b) Compensation pensions granted by the military disabled under the

Statute of the Retirement, approved by Decree-Law No 498/72, of 9

December;

(c) Blood price pensions granted under Decree-Law No 466/99 of 6

November, amended by Decree-Law No 161/2001 of 22 May;

d) Pensions of the military disabled transmitted to the surviving spouse or member

I do not think that this is the case.

received pursuant to Article 8 of Decree-Law No 240/98 of 7 August;

e) Lifetime allowances, ransoms and transfers paid under the Decree-Law

n. 26/2008, of February 22.

f) Pensions for closed groups of beneficiaries whose charges are

supported through provisions transferred to public systems of

pensions and pensions automatically updated by

indexation to remuneration of workers in the asset.

Article 4

Calculation of sustainability contribution

1 - The CS relates to the value of the monthly pensions set out in Article 2.

2 - For determining the amount of the monthly pension, the sum of pensions shall be considered.

paid to a single holder by the entities referred to in Article 2(2).

3 - CS application complies with the following rules:

a) 2% on all monthly pensions up to €2 000;

(b) 2% on the value of € 2 000 and 5.5% on the remnant of the value of pensions

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monthly up to € 3 500;

(c) 3.5% on the total monthly pensions of more than € 3 500.

4 - In cases where the application of the CS results in a total net monthly pension less than the

€ 1 000, the amount of the payment pension is maintained in the following terms:

a) For the award of a compensatory differential for the public system

pensions responsible for the payment of the pension when they are at issue

net amount pensions exceeding the minimum legally guaranteed values

or less than € 1 000;

(b) By assigning the social supplement when the pensions are at issue

minimum of the general social security scheme.

5 - In determining the applicable CS rate, the 14th month or equivalent and the subsidy

Christmas are considered autonomous tuition.

Article 5

Effect of sustainability contribution

1 - CS reverts to IGFSS, I.P., CGA, I.P., and CPAS, depending on

responsibility for the granting and payment of pensions, competing with entities

processors carry out their deduction.

2 - CS revenue is affects pension payment.

Article 6

Update of pensions

1 - The Government in conjunction with the Social Partners will review the form of

Annual update of pensions of the pension system and the social protection regime

on the basis of indicators of economic, demographic and demographic nature

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financing of pensions of the pension system and the social protection scheme

converging, in particular:

a) The real growth of gross domestic product;

(b) The average annual variation of the consumer price index without housing;

(c) The evolution of the working-age population and beneficiaries;

d) The evolution of the elderly and pensioners;

e) Other factors contributing to the sustainability of public systems

pensions.

2 - The application of the annual pension update rules cannot result in a reduction

of the nominal value of the pensions.

3 - Where in a given year the update of pensions is negative, the value of

pensions remain, its value being corrected in future positive update by

deduction of the accumulated negative effect in previous years.

4 - Minimum pensions and pensions and other benefits of the solidarity subsystem and

of the converging social protection regime of non-contributive nature can stay

subject to other update rules that guarantee adequate livelihoods.

Article 7

Amendment to Decree-Law No 137/2010 of 28 December

Article 7 of Decree-Law No 137/2010, of December 28, becomes the following

wording:

Article 7

[...]

Rebates for retirement and for pension purposes

the survival of public administration workers covered by

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convergent social protection regime becomes, respectively, 8.2%

and 3%."

Article 8

Change to the Code of Contributive Regimes of the Social Security System

Social security

Article 53 of the Code of Contributive Regimes of the Security Social Security System

Social, approved by Law No. 110/2009, of September 16, has the following essay:

Article 53

[...]

The overall contribution rate of the general scheme corresponding to the cast

protected eventualities is 34.95%, with 23.75% of the entity

employer and 11.2% to the worker, without prejudice to the provisions of the Article

next.’

Article 9

Imputation of global contributory rate increase

The increase in the contribution rate resulting from the amendment to Article 53 of the Code of

Contributive Regimes of the Social Security System, approved by the Law

no. 110/2009, of September 16, with the writing given by this law, is imputed

totality to the technical cost of the eventuality of old age.

Article 10

Change to the Value Added Tax Code

Article 18 of the Value Added Tax Code, approved by the

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Decree-Law no. 394-B/84, of 26 December, has the following wording:

Article 18

[...]

1 - [...]

a) [...]

(b) [...]

(c) For other imports, transmission of goods and benefits

services, the rate of 23.25%.

2 - [...]

3 - [...]

a) 5 %, 10 % and 18.20 % for operations which, according to

special legislation, if considered to be carried out in the Autonomous Region

of the Azores;

(b) 5 %, 12 % and 22.25 % for operations which, according to

special legislation, if considered to be carried out in the Autonomous Region of

Wood.

4 - [...]

5 - [...]

6 - [...]

7 - [...]

8 - [...]

9 - [...].»

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Article 11

Amendment to Decree-Law No 347/85 of 23 August

Article 1 of Decree-Law No 347/85, of August 23, has the following essay:

Article 1

[...]

1 - Tax rates are fixed at 5%, 10% and 18.20% respectively

on the added value referred to in paragraphs a), b) and c) of paragraph 1 of

Article 18 of the Value Added Tax Code, approved

by Decree-Law No 394-B/84 of 26 December to apply to

transfers of goods and services considered to be carried out

in the Autonomous Region of the Azores and in imports whose disembarkation

customs take place in this region.

2 - Tax rates are fixed at 5 %, 12 % and 22.25 % respectively

on the added value referred to in paragraphs a), b) and c) of paragraph 1 of

Article 18 of the Code on Value Added, approved by

Decree-Law no. 394-B/84, of 26 December, to apply to transmissions

goods and services considered in the Region

Autonomous Madeira and imports whose customs clearance

take place in this region.

3 - [...]

4 - [...].»

Article 12

Consignation of revenue

1 - The revenue of the value added tax resulting from the increase in the normal rate

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operated by this law, reported to the collection made from the respective entry

in force and the taxable operations carried out from the same period, it is consigned,

in equal parts, social security and CGA, I.P.

2 - For the purposes of the preceding paragraph, money transfers are made

the opening of special credits to be entered in the budgets for this purpose

the Ministry of Solidarity, Employment and Social Security and the Ministry of

Finance, respectively.

3 - The consignment of VAT revenue to the performance of pension expenditure resulting from the

increase in the normal rate operated through Articles 11 and 12 of this law and

( (i) of Article 32(6) of Law No 39-B/94 of 27 December is made in the

scope of the pension system for the collection carried out in each financial year

budget.

4 - The VAT revenue referred to in the previous number is annually affects social security.

Article 13

Revocational standard

Revocation of paragraph bArticle 7(1) and Article 8 of Decree-Law No 367/2007,

November 2nd.

Article 14

Entry into force

This law enters into force on 1 January 2015.

Visa and approved in Council of Ministers of 5 June 2014

The Prime Minister

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The Minister for the Presidency and Parliamentary Affairs