Portugal’s State Pension Age to Reach 68 in the 2040s: What Workers Should Know

Portugal’s next big pension milestone is already on the horizon: by the time today’s forty-somethings reach the end of their careers, they will need to work until 68 to qualify for a full state pension. That figure, published this week in the “Pensions at a Glance 2025” survey, places the country in the top tier of the OECD’s most demanding retirement ages and adds new urgency to the debate over how to balance longer lives with a shrinking workforce.

What pushes Portugal toward 68

The headline number is driven by two forces that rarely move in opposite directions: dramatic population ageing and an automatic link between the statutory pension age and life expectancy. With the average Portuguese citizen now expected to live more than 20 years after turning 65, the algorithm embedded in the Segurança Social formula ratchets the retirement bar upwards almost every year. The timetable is already mapped out: 66 years 7 months in 2025, 66 years 9 months in 2026, 66 years 11 months in 2027, and—assuming current demographic trends persist—68 in the early 2040s, making Portugal the eighth-highest among the 38 OECD economies.

The fiscal arithmetic behind the push

Public pensions swallow roughly 13 % of national output, one of the heaviest burdens in Europe. The system remains a pay-as-you-go scheme, so fewer births, modest immigration and a flat wage bill translate into thinner contribution flows just as benefit outlays expand. Government auditors have warned since 2018 that official forecasts understate risks, pointing to a dependency ratio set to slide from 1.7 workers per retiree today to near 1.3 within a generation. Without the gradual climb to 68, the Social Security Fund would face an annual deficit that could exceed 3 % of GDP by mid-century, according to the latest projections from the Court of Auditors.

Reactions in Lisbon and beyond

Labour confederations have reacted with predictable alarm. UGT labels the age escalation “socially untenable”, criticising what it calls a de facto penalty on employees in physically taxing jobs. CGTP-IN goes further, condemning the sustainability factor—a coefficient that cuts early pensions by almost 18 % next year—as a hidden tax on old age. Political parties are less aligned. The governing PS maintains that indexing to longevity is unavoidable; the Bloco de Esquerda revives its 2019 proposal to cap the legal threshold at 65; liberal newcomers defend incentives for later exit rather than a fixed ceiling. With both presidential and legislative elections scheduled for 2026, the subject is certain to dominate campaign rallies from the Minho to the Algarve.

Lessons from northern neighbours

Portugal is not alone. Denmark, the Netherlands, Estonia, Sweden and the United Kingdom have already legislated paths to 68 or beyond, relying on regular reviews that adjust the bar in line with new mortality data. Their experience shows that pairing a higher state age with robust occupational pensions, generous training vouchers and strict anti-age discrimination laws can soften the blow. Economists here note, however, that private-sector coverage in Portugal is limited—only about 12 % of employees own a funded plan—so the public pillar remains crucial.

What it means for workers and firms

For individual employees, the message is clear: careers will stretch, and saving early becomes imperative. The government has started to float tax credits for third-pillar products and portable individual retirement accounts, but uptake remains tepid. Companies, meanwhile, face the challenge of redesigning workplaces to accommodate older staff—from flexible schedules to ergonomic upgrades—while ensuring younger recruits are not locked out. Human-resources specialists caution that productivity gains will hinge on retraining budgets and a willingness to promote multigenerational teams.

Outlook

Few analysts expect the political momentum toward 68 to reverse. Even if economic growth rebounds, the demographic headwind is too strong to ignore. What remains open is how Portugal will cushion vulnerable groups—manual labourers, the long-term unemployed, and those with interrupted contribution histories—so that longer working lives do not translate into wider poverty in old age. For now, the clock on the pension age continues to tick upward, and each extra month added to the statute book signals a broader reckoning with how the country finances dignity in retirement.