Working after retirement: 10 questions and answers
Does the retirement age in Portugal vary? Which is?
Retirement age lowered in 2023 for 66 years and 4 months. The 3-month decrease compared to 2022 was due to the reduction in average life expectancy at 65 years.
One INE press releasedated November 2021, reported that the provisional value of average life expectancy at age 65 increased, in the three-year period ending in 2021, to 19.35 years, while in the three-year period ending in 2020, it stood at 19.69 years.
This is therefore a 0.34 year decrease in this indicator, i.e. 4 months, as a result of the increase in the number of deaths in Portugal, as a result of COVID-19.
Personal Retirement Age? What is that?
The personal retirement age is the possibility of requesting a pension without any type of penalty for those who have more than 40 years of discounts. This figure was created in 2019 with the new early retirement regime, which made it possible, as the name implies, to anticipate the retirement request before said 66 years and 4 months.
Thus, the regime of long contributory careers allows the definition of a personal retirement age. That is, an age for accessing retirement entirely different and lower than the legal age in force.
In this regime, the normal age for access to the pension (66 years and 4 months in 2023) is reduced by four months for each year beyond 40 in the contributory career.
Is it possible to continue working after retirement and receive pension at the same time?
According to the lawaccumulation is possible except in the following cases:
- If the old-age pension results from the conversion of an absolute disability pension;
- If you receive the old-age pension early and, in the first three years from the date of access to the pension, work or carry out an activity, in any capacity, in the same company or in another company of the same group.
To apply for an old-age pension, you must go to Social Security with your application. After receiving the pension, the employment contract becomes a six-month term contract, renewable for equal and successive periods. There is no limitation on renewals.
What if I don’t want to claim old-age pension?
Even though the retirement age is legally defined, this does not mean that you have to retire. Furthermore, your employment contract is not terminated simply because you have reached retirement age. However, if you continue to work until the age of 70, without claiming the old-age pension, the employment contract will have a term of six months.
Whoever has an employment contract does not have to do anything: if both the employer and the employee are interested, the employment relationship and the contract are maintained.
What are the advantages of working after retirement?
If you choose to accumulate the old-age pension with income from work as an employee or self-employed, the main advantage is that you receive two payments. And if you continue to deduct for Social Security, you still receive a small half-yearly increase.
Are you still paying for Social Security?
If you are receiving your pension and continue to work as a self-employed person, you may be exempt from Social Security contributions.
If you work for someone else, you must make Social Security deductions at the current rate.
By continuing to cash in, you will be entitled to an increase in your old-age pension of 1/14 of 2% of your total earnings. According to Social Securityif you receive the old-age pension, a rate of 7.5% will be deducted.
Absolute disability pensioners are left out, since they are prevented from carrying out any remunerated activity and, therefore, are not entitled to an increase.
How do I get the addition?
If you continue to discount, you don’t need to do anything, the addition is automatically assigned. Thus, add to the amount of the pension 1/14 of 2% of the total registered earnings. Payment is made in June or November based on the previous year’s earnings.
You always have to declare the two types of income you earn to Finance: pension and income from work. It is also important to understand whether or not you do withholding at source so as not to have negative surprises when settling accounts with the Treasury. Remember that if you exceed the minimum existence with the accumulation of income you may have to pay tax.
You are exempt from submitting the IRS declaration if the sum of the income from dependent work and the pension is less than 8,500 euros and if none of them has been subject to withholding tax.
How do you know if you do withholding?
Withholding tax is a mechanism for paying the IRS to the State by the employer. You can find out on your receipt if you are withholding, or ask your company. But any salary equal to or above 762 euros gross (value for 2023) is withheld at source, and then the Tax and Customs Authority calculates it according to the household and the number of dependents.