Portugal's State Pension Covers the Average Worker but Leaves Low Earners and the Self-Employed Short, and Its Savers Rank Third for Early Withdrawals, an OECD Report Shows

Portugal's state pension is one of only nine in the OECD that, under current rules, already replaces at least 70 percent of earnings for a man on average pay after a full career, according to the OECD Pensions Outlook 2026, published on Wednesday 4 November. Yet Portuguese savers pulled 3 percent of their private pension assets out early in 2025, one of the highest rates in the report, and earned some of the lowest returns in the OECD.

Who the OECD thinks needs to save more

The OECD measures a "contribution gap": the share of earnings a worker would have to put into a private pension each year, from age 22 to retirement, to reach a target income of 80 percent of pay for low earners (half the average wage), 70 percent for average earners and 60 percent for high earners (twice the average). For an average-paid Portuguese employee the gap is zero (as in Spain, Italy and six other countries). In 17 of the 41 countries studied the same worker would need to save at least 10 percent of pay.

Portugal does have two exceptions. Low earners on half the average wage show a small gap, about 2 percent of earnings on the OECD's chart, making Portugal one of 12 countries where low earners face a bigger gap than average and high earners. The self-employed show a gap of about 4.5 percent; across the OECD the average is 13.1 percent for the self-employed against 9.7 percent for employees. If you are on recibos verdes, this is the group the OECD is describing.

The OECD calls its figures "minimum estimates". Shorter careers or future reforms would make the gaps larger, and starting to save at 45 rather than 22 roughly doubles them. That caveat matters for immigrants who arrive mid-career and will have fewer years of Portuguese contributions.

A savings boom, and a lot of early withdrawals

Contributions to pension plans in Portugal rose 27 percent in 2025, which the OECD puts down to personal plans used as long-term investments with "comparatively favourable" tax treatment: in practice the Planos Poupança-Reforma (PPR, retirement savings plans). ECO reports that only Türkiye saw faster growth among OECD members.

At the same time, withdrawals before retirement came to 3 percent of assets, behind only Kazakhstan (5.1 percent) and Zambia (6.9 percent), against under 0.1 percent in Chile and Costa Rica. The report does not say why. OECD guidance says early access should be "a measure of last resort" for hardship.

Low returns, for savers and for the reserve fund

Portuguese pension providers earned a real return of 1.6 percent in 2025, net of costs; only five OECD countries did worse, in a year when world shares gained about 20 percent. Private pension assets stand at 12.7 percent of GDP, in the group below 20 percent alongside Spain, Italy and Germany.

The Fundo de Estabilização Financeira da Segurança Social (FEFSS, the Social Security reserve fund) grew to 13.7 percent of GDP at the end of 2025, from 12.4 percent a year earlier, but returned 1.7 percent in real terms. With 23 percent of its money in shares and 76 percent in bonds, it trailed the reserve funds of South Korea (16.1 percent), Japan (14.8 percent) and New Zealand (11 percent), which hold half or more in equities.

What comes next

The report lands as Portugal's pension supervisor pushes to sign workers up to workplace pensions by default, with a plan hoped for around March 2027. The OECD's reassuring figure assumes a full, unbroken career; a resident whose record has gaps is the case it warns about.