Portugal’s government proposed a bill to cut public sector pensions and reduce a gaping hole in the system that is hampering efforts to shift the bailed-out country’s finances onto a sustainable footing.
Pensions for retiring public servants of more than 600 euros a month will be slashed by around 10 percent on average from the start of 2014, according to the bill, which was approved at a cabinet meeting and will now be presented to parliament.
Public Administration Secretary Helder Rosalino told a news briefing that recalculating pensions and contributions would trim the deficit in the public pension system by 1.1 billion Euros in 2014 from 4.4 billion Euros ($5.9 billion) this year.
He also said the government proposed to amend a labour bill rejected last month by the Constitutional Court in a blow to the government’s spending reduction strategy , and this pension bill aims to bring public sector pensions closer to those for private sector workers, and will affect about two-thirds of some 470,000 contributors to a state pension fund known as Caixa Geral de Aposentacoes, Rosalino said.
The proposed changes, which he said addressed the court’s objections and should make up for the impact of the rejection, would still be discussed with the unions before going to parliament.