Social Security posts biggest budget surplus in more than a decade

Social Security posted its biggest budget surplus in more than a decade, reaching 4,059 million euros in 2022, up 1,711 million from 2021, the Public Finance Council (CFP) said on Thursday.

The surplus was achieved in a year in which social security continued to be affected by measures taken in previous years due to the pandemic, as well as the adoption of new support in the context of a geopolitical shock, the CFP report said. on the evolution of the budget of Social Security and Caixa Geral de Aposentação (CGA) in 2022.

“This result was driven by an increase in actual revenue of €2,220 million, outpacing an increase in expenses of €508 million,” the report says.

The cost impact of measures implemented as part of covid-19 was €607.4 million in 2022, with €616 million allocated to finance it.

However, says the CFP, “in the case of measures taken after a geopolitical shock, it is only possible to determine the total cost of the measures (1,326.2 million euros), without a corresponding definition of their financing, without being, therefore, it is possible to clear its impact on the balance sheet.”

“The lack of this information on revenues worsens the transparency of the budget execution of this sub-sector, as it does not allow checking whether these measures, which should have a zero impact on the social security balance sheet, were or were not fully funded by the state. Budget (OE),” warns the organization led by Nazaré da Costa Cabral.

Social security revenues, excluding the European Social Fund (ESF) and the European Fund for the Most Disadvantaged (FEAC), rose by 6.9% year-on-year, mainly due to an 11.8% increase in social contributions.

The increase in contributions “translates as an increase in remuneration claimed in Social Security and net job creation due to the favorable macroeconomic environment, as well as an increase in the Guaranteed Minimum Monthly Remuneration (RMMG) by €40 (from €665 in 2021 to €705 in 2022), which increased the minimum amount of the base for contributions and deductions,” explains CFP.

“Expenditures adjusted for these effects increased by 1.7% compared to the previous year”, reflecting not only the impact of some of the measures taken after the pandemic crisis (599.2 million euros) that still remain, but also the implementation of new measures aimed at mitigating the consequences inherent in the geopolitical shock (1,309.6 million euros), for a total amount of 1,908.8 million euros,” the document says.

Excluding the impact of these measures, actual spending would be down 4.7% compared to 2021, according to the CFP.

The authority also highlights a 6.6% increase in pension spending justified by “the creation of an exceptional pension supplement and part of the emergency pension renewal”, as well as a 123.1% increase in other benefits “as these combined measures of geopolitical shock, social action (+10 .9%), parental allowances (+12.4%), family allowances (+3.9%), and subsidies and sickness allowances (7.3%).”

“The emergency renewal of pensions and allowances increases its weight in actual spending. In fact, in 2017, the first year of implementation, this amounted to 77 million euros, reaching 896 million euros in 2022,” points out the CFP.