Social Security pension fund exceeds 40 billion for the first time

The Social Security Financial Stabilization Fund (FEFSS) surpassed the €40 billion asset threshold for the first time in its history. According to data collected by ECO from the agency, the pension cushion closed the first half of the year with €40.28 billion in assets under management, approximately 18.9% higher than the figure recorded a year ago.

Furthermore, the €40.28 billion FEFSS portfolio at the close of business in June corresponds to a pension coverage rate of 208.6%, equivalent to 25.04 months of pension payments. This figure is 4.3% above the legal target of the FEFSS being able to safeguard two years (24 months) of pensions in case of need, demonstrating that the fund clearly exceeded its initial objective.

This achievement is largely the result of the historic transfer of €4.08 billion from the Social Security pension system balance made in February , as announced by the Minister of Labor, Solidarity and Social Security, Maria do Rosário Palma Ramalho, earlier this year. This was considered "the largest transfer ever" to the fund created in 1989 to financially stabilize the Portuguese pension system.

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In addition to this "check," the FEFSS also benefited from a strong market recovery in the second quarter and the skill of the fund's management team, led by José Vidrago, who delivered a net transfer return of 0.87% for the first six months, after recording losses of 1.37% in the first quarter. This recovery occurred after a volatile start to the year in the financial markets, which particularly affected the fund's equity portfolio.

The main asset contributing to FEFSS's positive management performance in the first six months of the year was the OECD debt portfolio (excluding Portuguese debt), which currently represents almost 50% of the fund's portfolio. This component posted gains of 2.04% in the first six months of the year, a reversal compared to the 1.61% contraction recorded in the same period the previous year.

The equity portfolio, composed exclusively of exchange-traded funds (ETFs) and accounting for approximately 18% of the FEFSS's total portfolio, achieved gains of 0.87% in the first half of the year, after recording losses of 3.57% in the first three months. This component has historically been one of the fund's main drivers of appreciation, with legal limitations preventing exposure exceeding 25%.

Even more disappointing was the performance of the Portuguese public debt portfolio, which represents about 25% of the Social Security fund's portfolio , which closed the first half of the year with a gain of just 0.37%. This mandatory exposure to Portuguese securities has been highlighted as a limiting factor in the fund's potential returns.

The FEFSS's historic record of surpassing €40 billion reflects a golden moment for the entire Portuguese social protection ecosystem. This achievement is not an isolated one, but is perfectly aligned with the robustness of Social Security's accounts, which recorded a surplus of €2.361 billion through April—a 16% increase compared to the same period last year—and with the Caixa Geral de Aposentações's positive balance of €148 million, which contrasts with the structural deficit that traditionally characterizes this institution.

The driving force behind this joint performance lies in the dynamism of the labor market, which boosted contributions and contributions to a 9% year-on-year growth rate through April , far exceeding government expectations. The increase in the number and average value of remunerations declared by employers created a virtuous cycle that not only fuels the current Social Security surplus but also strengthens the future through the capitalization of the FEFSS.