President approves welfare reform protecting up to €620 million in PRR funding – Portugal Resident

President António José Seguro has approved the government’s new Single Social Benefit, allowing Portugal to safeguard up to €620 million in European recovery funding — warning that no existing recipient can be left worse off.

The reform, known as the Prestação Social Única (PSU), will replace 13 existing non-contributory benefits with a single payment calculated according to household income, composition and circumstances.

Portugal had committed to completing the measure by August 31 as part of its Recovery and Resilience Plan. Approval and implementation of the reform were linked to the release of an estimated €600–620 million in wider PRR funding.

Seguro’s promulgation therefore removes a potentially costly obstacle for the government. But the president made clear that satisfying Brussels and simplifying the welfare system must not result in reduced protection for vulnerable citizens.

“No process of simplification can result in a reduction in social protection,” he said.

The PSU will absorb benefits including the Social Integration Income (RSI), social unemployment benefit, social old-age and widow’s pensions, orphan’s benefit and several non-contributory payments connected to parental leave, disability and pregnancy.

The government says the new system will reduce bureaucracy, eliminate overlapping rules and make it easier for people to receive support to which they are entitled.

Its reference value will be set at 50% of Portugal’s Social Support Index, equivalent to approximately €268.60 in 2026. The amount received by each household will vary according to its income, size and applicable supplements.

The government says the reform represents more than €30 million in additional annual social spending. It also estimates that replacing 13 separate computer systems with a single platform will save approximately €3.2 million a year.

“No one can be worse off”

Seguro said the reform represents “a step in the right direction”, but warned that its true impact would depend on the detailed regulations and the way the system is implemented.

The ordinance governing the transition must ensure that “no one is disadvantaged compared with the situation from which they benefit today”, he insisted.

The president called for particular protection for “the most vulnerable, low-income families, older people, people with disabilities and all those living in situations of greater fragility”.

The legislation authorising the PSU stipulates that the new system must be no less favourable overall than the benefits it replaces. It will take effect at the end of December, with transitional arrangements required for existing recipients.

Seguro’s warning reflects concern that merging different benefits, each designed for particular circumstances, into a single system could produce individual losers even if overall welfare spending does not decline.

He cited a recent OECD study indicating that Portuguese social benefits remain comparatively low, with insufficient coverage and impact to combat poverty and social exclusion fully.

For the president, that weakness makes it especially important that streamlining the system does not become a means of withdrawing support.

Councils must receive adequate funding

Seguro issued a second warning over the additional responsibilities the reform will place on local authorities.

Municipalities must receive the staff, resources and funding necessary to perform any new functions assigned to them, he said.

The president has made the same argument during previous transfers of powers from central government: additional municipal responsibilities must be accompanied by “an adequate reinforcement of resources, particularly financial resources”.

With the decree-law now promulgated, attention turns to the detailed rules and practical transition to the PSU — the stage at which it will become clear whether the government can keep its promise that none of the people currently relying on the 13 benefits will be left worse off.

source material: Executive Digest