Immigrant Paychecks Are Propping Up Portugal’s Pension Fund

Portugal’s welfare fund just crossed an unlikely milestone: more than 1 million foreign workers now pay into the national Segurança Social, cushioning the system at a moment when the local labour force is shrinking and retirees are multiplying. Their contributions rose faster than any other revenue stream last year, and fresh immigration rules that took effect in January aim to keep that momentum going. Beneath the upbeat headline, however, lie stubborn salary gaps and lingering questions about how long immigration can offset Portugal’s demographic drag.

A cash-flow boost built on newcomers’ payslips

The social-security budget is fueled primarily by payroll taxes—11% from employees and 23.75% from employers. In 2024 the pool of active payers climbed 2.4% to about 5.6 million, but virtually the entire net increase came from foreign citizens, whose numbers jumped 15.1%. Native Portuguese contributors slipped by 0.1%. For the first time, foreigners made up almost 19% of all contributors, although their payments accounted for just 12.4% of total receipts because average wages in sectors such as agriculture, construction and hospitality remain low.

Between January and August 2024, immigrants transferred nearly €2.2 billion into the treasury; by year-end that figure hit roughly €3.6 billion, equal to 8.7% of all social-security revenue. Officials note that the surplus generated by these workers—contributions minus the benefits they received—exceeded €1.8 billion in the first eight months alone, a buffer that helped fund pensions for 17% of retirees.

Who are the new taxpayers—and where do they work?

Brazilians continue to dominate the registers with more than 400 000 contributors, or 37% of the total foreign cohort, followed by citizens from India, Bangladesh, Nepal and Cabo Verde. Many settle in rural Alentejo or Beira Baixa, where booming agribusiness creates year-round demand for seasonal labour. In municipalities like Odemira and Ferreira do Alentejo, foreigners sometimes outnumber Portuguese workers on the fields. Urban construction sites and Lisbon’s tourism-driven restaurant scene absorb tens of thousands more.

Pay packets tell a different story. The national gross monthly wage averaged €1 602 last year, yet the typical immigrant earned closer to €600–€800, often below the statutory minimum. That disparity explains why foreigners provide nearly a fifth of the labour force but less than one-eighth of social-security cash. The upside is youth: immigrants are on average a decade younger than Portuguese workers, meaning decades of potential contributions lie ahead if they stay.

2025 reforms: clearing the paperwork backlog

To capitalise on the demographic dividend, the government introduced a one-off regularisation scheme in January. Anyone who had been paying into Segurança Social before 4 June 2024—even without a filed Manifestação de Interesse—can now legalise their status by 30 June 2025. Residence permits that would have expired this year were automatically prolonged until mid-October 2025 under Decreto-Lei 85-B/2025. The rebranded migration agency, AIMA, has shifted many services online, promising two-week turnarounds for renewals that previously took months.

Freelancers should note a quieter change: the 2025 contribution base for independent workers is being recalculated using 2024 tax profits, themselves derived from 2023 income. While the formula remains 70% of declared profit, authorities have hinted at future tweaks to encourage compliance among digital nomads and gig-economy couriers.

Immigration isn’t a silver bullet—yet it buys precious time

Portugal is already the EU’s second-oldest nation; forecasts suggest that by 2030 the ratio of workers to pensioners could fall to 1-to-1. A Nova SBE study warns that clamping down on immigration would force tax rises of up to 15% or steep cuts in state spending. Brussels projects that by 2070 the average pension will cover just 41% of a retiree’s final salary, down from today’s 75%, unless the contributor base widens or reforms kick in. In that context, every new work contract signed by an immigrant delays the crunch, even if it does not eliminate it.

Comparatively, Portugal’s share of foreign contributors climbed from 3% to 19% in under a decade, outpacing several EU peers. Eurostat data show that 32% of immigrants aged 15–74 in Portugal hold a university degree—higher than the EU average—suggesting room to shift from low-wage fields to higher-skill positions that would generate larger payroll taxes.

Thinking of relocating? What you should know

Foreigners who take a job contract will automatically receive a nine-digit Número de Identificação de Segurança Social. Contributions are withheld monthly and grant access to public healthcare, parental leave, unemployment support and, eventually, a pension. Registering early is crucial, because eligibility for residency renewals increasingly hinges on proven social-security payments. Employers must pay their share within eight days of wage disbursement; expats who freelance settle dues quarterly through the online portal.

The bottom line: Portugal’s pension pot desperately needs fresh contributors, and policy-makers have opened multiple doors for legally employed immigrants. For foreigners, that means a smoother path to residency and social protections—provided they are prepared for modest starting salaries and, in many cases, work outside Lisbon’s postcard districts. If the system holds, today’s contributions could translate into tomorrow’s benefits, turning Portugal’s demographic challenge into a mutually beneficial opportunity.