Highest surplus for over a decade
Portugal’s social security system recorded its highest budget surplus in more than a decade, reaching €4.059 billion in 2022 – an improvement of €1.711 billion on 2021, the public finance council (CFP) said today.
The surplus was achieved in a year in which social security continued to be affected by measures implemented in previous years due to the pandemic, as well as by the adoption of new support in the context of geopolitical shock, says the CFP in its report on the budgetary evolution of social security and Caixa Geral de Aposentações (CGA – the civil service pension fund) in 2022.
“The increase in effective revenue by €2.22 billion contributed to this result, surpassing the increase in expenditure which amounted to €508 million”.
The impact on expenditure of the measures implemented under Covid-19 was €607.4 million in 2022, with the amount allocated to its funding being €616 million.
However, according to the CFP, “in the case of the measures adopted following geopolitical shock, only the overall value of the measures (“€1.326 billion”) can be determined, without the corresponding identification of their financing, and it is therefore not possible to exclude their effect on the balance.
“The absence of this information on revenue jeopardises the transparency of the budgetary implementation of this sub-sector, as it does not allow us to verify whether these measures, which should have a zero impact on the social security balance, were fully financed by the state budget (OE) or not,” warns the body led by Nazaré da Costa Cabral.
Social security revenue, excluding the European Social Fund (ESF) and the European Fund for Assistance to the Most Deprived Persons (FEAC), grew by 6.9% compared to the previous year, mainly due to the 11.8% increase in social contributions.
The growth of contributions “reflects the increase in salaries declared to social security and the net creation of jobs, due to the favourable macroeconomic environment, as well as the increase of the guaranteed minimum monthly wage (RMMG) by €40 (from €665 in 2021 to €705 in 2022), which increased the minimum amount of the tax base for contributions and levies,” explains the CFP.
“Expenditure adjusted for the aforementioned effects increased by 1.7% compared to the previous year”, reflecting not only the impact of some of the measures adopted in the wake of the pandemic crisis (“€599.2 million), and which still remain in place, but also the implementation of new measures aimed at mitigating the effects inherent to geopolitical shock (€1.309.6 billion), totalling €1.908.8 billion,” the document goes on.
According to the CFP, excluding the impact of these measures, effective expenditure would have decreased by 4.7% compared to 2021.
The agency also highlights the 6.6% increase in spending on pensions, justified “by the creation of the exceptional pension supplement and the extraordinary pension update” and the 123.1% rise in other benefits, “as these include geopolitical shock measures, social action (+10.9%), parental benefits (+12.4%), family allowance (+3.9%) and sickness benefits and supplements (7.3%)”.