How do pensions work in Portugal?

If you work in Portugal, you pay into Portuguese social security and build a Portuguese state pension. UK and Portuguese years can be added together to qualify, each country pays its own share, and once you live in Portugal it taxes most of your pensions.

The Portuguese state pension

Portugal’s main state pension is the old-age pension (pensão de velhice) of the general social security scheme, paid by Segurança Social. It is built from the social security contributions taken from your pay (11% from employees) or paid as a self-employed worker (trabalhador independente). See How much tax will I pay in Portugal?

• Pension age is linked to life expectancy at 65 and changes each year. It is 66 years and 9 months in 2026 (set by Portaria 358/2024/1) and 66 years and 11 months in 2027
• You need at least 15 calendar years with earnings recorded, in a row or not. From 1994, a year counts if it has at least 120 days of contributions; shorter years can be grouped together
• People with 40 or more years of contributions can have a lower personal pension age; with fewer than 40, you generally can’t retire early under the flexible scheme. Special rules exist for long-term unemployment, some professions, disability and very long careers of 46 or 48 years
• The amount depends on your reference earnings and the number of years with contributions, so a short Portuguese career gives a smaller pension

Once you have a social security number (NISS), ask Segurança Social for a statement of your contribution record from time to time, so any gaps are spotted early.

Counting UK and Portuguese years together

Since 2021 the social security protocol of the UK–EU Trade and Cooperation Agreement has coordinated the two systems for people not covered by the Withdrawal Agreement, who keep the EU rules. Under either, UK insurance periods from before and after 2021 can be added together (totalised) to meet Portuguese minimums; Segurança Social’s guide to the agreement explains how. GOV.UK confirms that contributions in EU countries can count towards the qualifying conditions for a UK State Pension, whatever your nationality and whenever you moved.

• Each country pays its own part, based on the years you contributed there, and only from its own pension age. You may draw your UK State Pension and your Portuguese pension at different ages
• Contact the pension authority in the country you live in: it may notify the pension schemes of the other countries you lived or worked in
• To claim your UK State Pension from Portugal, contact the International Pension Centre within 4 months of your UK State Pension age
• Ask both sides for a forecast well before you retire

Your UK State Pension and the S1

You can carry on receiving your UK State Pension in Portugal, and it is increased every year in line with the rate paid in the UK. The full new State Pension is £241.30 a week in 2026–27. Once you draw it, you can usually register an S1 so Portuguese state healthcare is paid for by the UK. For voluntary National Insurance, workplace and personal pensions and lump sums, see What happens to my UK pension? and How does Portuguese healthcare work for Brits?

PPR: Portuguese retirement savings plans

A PPR (plano poupança reforma) is a retirement savings product sold by banks, insurers and fund managers. You can deduct 20% of what you pay in from your IRS bill, up to a cap that depends on your age:

• There is an overall limit on deductions from your tax bill that depends on your income, so health and education expenses can leave less room for the PPR deduction
• To keep the tax benefit, you can normally only take money out after 5 years, from age 60, on retirement, or in some other cases set by law, such as paying your home loan instalments
• Taking money out early can mean paying back the deduction plus a surcharge. Compare fees and investment risk before you choose a plan

How Portugal taxes pensions

• Pensions are category H income for IRS. Each person gets a standard deduction of up to €4,587.09 a year from pension income in 2026 (about £3,887), and the rest is taxed at the normal rates of 12.5% to 48%
• Under Article 17 of the 2025 UK–Portugal treaty, UK private and workplace pensions are taxed only in Portugal once you live there. You also declare your UK State Pension in Portugal
• UK government service pensions (civil service, armed forces, police, local authority and similar) stay taxed only in the UK if you are a British national (Article 18)
• The old NHR 10% rate on foreign pensions is closed to new arrivals, and IFICI gives no pension relief. Madeira’s IRS rates are 30% lower than the mainland’s in 2026
• Get advice before taking a lump sum once you are Portuguese resident. See Do I still pay UK tax?