Costa announces 3.57% temporary pension increase from July

Prime Minister António Costa announced on Monday new measures to support families, which were adopted at an extraordinary Council of Ministers.

António Costa recalled that the country was facing a “serious inflationary crisis” that “began with the pandemic and was strongly affected by the war in Ukraine.” According to António Costa, the government “is taking a set of measures to support families and companies.” Among the measures, the Prime Minister singled out “an extraordinary supplement to the half pension paid to pensioners.”

The Prime Minister stressed that the measures taken by the Government have made it possible to improve the economic situation in the country, as Minister of Finance Fernando Medina announced on Monday.

Interim increase in pensions by 3.57%
António Costa announced a temporary increase in pensions of 3.57% compared to July and said that the first payment of 90 euros of support paid to families will be made this Thursday. The Head of Government also recalled the entry into force of the law on zero VAT for certain goods.

The prime minister said that rent support and interest subsidies for those with high rates will begin to be paid in May next year. We are talking about supporting families whose income tax efforts exceed 35%, as well as supporting those who have a loan to buy or build a house to offset the efforts to pay off loans due to higher interest rates.

“We will never take a step larger than a foot,” Costa said. The prime minister also said that with responsibility, one can “continue to face a major inflationary crisis”: “If we continue to act together in this way, we can control it.”

Reducing unemployment
Labor Minister Ana Mendez Godinho said the country is seeing “an evolution in the number of jobs and social security contributions. We have broken the record for the active population of Portugal.”

In 2023, the country registered an increase of 150,000 workers compared to the previous year. The Secretary of Labor also mentioned that the IEFP recorded the lowest enrollment in 30 years.

Ana Mendez Godinho also noted “a significant increase in average wages.” Compared to 2015, social security revenues increased by 68%, which means an inflow of more than nine billion euros.

With the increase in the number of employees and the declared wages, the Government foresees a positive balance sheet dynamics, which will allow to fulfill what was supposed to guarantee the income of pensioners.

Decrease in IRS income
António Costa said that in terms of taxes, IRS revenues have fallen by two billion euros since 2016. The prime minister also stressed that the government expects another cut of two billion euros in 2026.

“This year we have taken a prudent measure regarding the payout formula. With an intermediate increase that we will have in July, we will have an increase in pensions in the second half of the year,” Costa said.

Inflation recorded more favorable dynamics than expected
António Costa recalled that in September the government announced that inflation would be very high in the country. “We had to guarantee two things: that the pensioners would not lose a cent of the money provided, and that the stability of social security would continue to be ensured,” Costa said, stressing that “the behavior was more favorable than what was expected”, which allows for an increase in pensions “without any changes and losses”.

“Now it is important to remain confident. To do this, it is necessary to speak the truth and never risk stumbling or retreating,” António Costa assured.

“The measures we have taken have had an effect. Electricity inflation is much lower than 10%,” the prime minister stressed. However, Costa suggested “above-average food inflation” and ensured that the government was looking for “measures to mitigate the impact on the cost of food production.” “We have already done our part,” the prime minister said, referring to the list of products with zero VAT, and stressed that the government is confident that partners will do the same. “Every time we go shopping, we can already see the impact of this measure,” he said.

Increase in pensions from 2016
“Since 2016, pensions have increased compared to the previous month. There was no reduction,” said António Costa, who also accused the PSD of being “inconsistent.” “At the same time, when they said that we have cut pensions, they also stressed that we are unrealistic in the measures we are taking. We made fair and balanced decisions,” he said.

“Those who govern must have the calmness and calmness to face criticism. There is a difference between those who speak and those who act,” the Prime Minister said.