In Portugal, disparities in bank employee pensions highlight ongoing injustices

The recent transfer of the remaining Caixa Geral de Depósitos (CGD) workers’ pension fund to the Caixa Geral de Aposentações (CGA) in 2023 has revealed significant disparities in the treatment of bank employees in Portugal.

According to Paulo Gonçalves Marcos, President of the Portuguese member association of CEC European Managers (Sindicato Nacional dos Quadros e Técnicos Bancários), this move underscores a deep-seated inequality between retired and active bank employees, who are treated as first-class citizens by public authorities, and their peers who remain subordinated.

In Portugal, retirees in the banking sector often receive only partial updates on their Social Security pensions, often retiring with merely 40% to 50% of their final salary

The roots of this inequality trace back to the inception of Social Security, which initially excluded certain professional classes until the completion of technical studies. For bank employees, this exclusion meant only a partial integration into Social Security.

Those hired after 2007 have been fully integrated, enjoying all associated rights and duties. However, those retired by pension funds established through 1980s collective bargaining saw only partial integration by late 2011, which provided them with a semblance of legal certainty. This integration assured them that their pensions would be state-paid rather than employer-dependent.

This assurance was crucial. Historical deviations in discount rates and capital market fluctuations necessitated substantial financial reinforcements to pension funds.

For instance, Banco Comercial Português (BCP) had to inject approximately 1.5 billion euros into its pension fund over a decade. This raises a pertinent question: what if BCP had lacked the capacity or willingness to make such reinforcements?

Yet, this partial integration left significant gaps. Pension updates for these retirees, alongside a fair distribution of benefits between banking time and Social Security time, remained unresolved. Unions have achieved some success in addressing these issues through the courts, but the overarching problem persists.

President Paulo Gonçalves Marcos emphasizes the necessity for the government, trade unions, and credit institutions to advocate for the full integration of all bank employees into Social Security.

Many bank employees—those hired before 2007 and not retired by the end of 2011—are particularly disadvantaged. These tens of thousands of individuals do not benefit from sovereign state guarantees for their current and future pensions.

Moreover, retirees receive only partial updates on their Social Security pensions, often retiring with merely 40% to 50% of their final salary, a replacement rate far below that enjoyed by the majority of Social Security-affiliated workers.

These bank employees, unlike their CGD counterparts, do not receive pensions with sovereign guarantees, higher amounts, or legislatively mandated updates. This discrepancy underscores the urgent need for a comprehensive resolution. Paulo Gonçalves Marcos emphasizes the necessity for the government, trade unions, and credit institutions to collaboratively address this injustice, advocating for the full integration of all bank employees into Social Security.

The call to action is clear: it is never too late to rectify such glaring disparities. By ensuring equitable treatment for all bank employees, Portugal can uphold the principles of fairness and social justice.