The sustainability of pension and retirement systems in Cape Verde has proved to be a strategic priority for the government and the institutions responsible for social protection. In a global context characterised by economic and social challenges, the country has adopted innovative measures and inclusive policies to guarantee citizens' financial security and foster an environment conducive to economic growth and social cohesion.
The 2023 State Budget introduced significant initiatives, such as extending the Social Pension to 3,000 more beneficiaries, an essential step towards social inclusion and the reduction of extreme poverty. This endeavour was complemented by the creation of the MAIS Fund, financed by an increase in the Tourist Tax, with the aim of eradicating extreme poverty within a defined timeframe. These measures emphasise the government's commitment to responding to the needs of the most vulnerable populations, as highlighted in the official website of the Government of Cape Verde.
At the same time, the National Social Security Institute (INPS) has played a crucial role in assessing the sustainability of the compulsory social protection system. The presentation of the 2021 Actuarial Study reinforced the importance of decisions based on rigorous actuarial data, ensuring that the policies adopted are appropriate to the country's economic and social reality. This study, which is carried out every five years, is a fundamental instrument for maintaining the stability of the system, as evidenced by the INPS portal.
In addition, the 2025 State Budget reinforces the commitment to inclusion and equity, allocating 4.17 billion escudos to the Ministry of Family, Inclusion and Social Development, the largest social investment in the country's history. This budget, aligned with the Strategic Plan for Sustainable Development (PEDS II), aims not only to reduce absolute poverty, but also to promote economic diversification and the transition to a green and digital economy. More information on these priorities can be found at Cape Verde Government website.
In this scenario, the role of companies is equally important. The government has encouraged sustainable business practices and the adoption of measures that contribute to economic and social development. The reduction in the corporate income tax rate and tax incentives for salary valorisation are examples of policies aimed at easing the tax burden on companies and stimulating innovation and growth. These initiatives are detailed in reports such as S&D Consultancy.
This report therefore comprehensively explores the pension and retirement landscape in Cape Verde, highlighting public policies, the challenges faced and the opportunities for the business sector. The aim is to provide a detailed analysis that allows us to understand the impact of these measures on society and the business environment, ensuring a more inclusive and sustainable future for all.
Contents
The pension system in Cape Verde is made up of two main schemes: the contributory scheme, managed by the National Social Security Institute (INPS), and the non-contributory scheme, under the responsibility of the National Centre for Social Pensions (CNPS). These schemes are fundamental to guaranteeing the social protection and economic sustainability of various population groups, particularly the most vulnerable. The legislation governing the social protection system was strengthened by Decree-Laws 47-48-49/2009, which extended coverage to self-employed workers and domestic service professionals (Government of Cape Verde).
Furthermore, the introduction of reforms in the social security sector, such as the elimination of the retirement age discrepancy between genders and the possibility of early retirement, reflects the government's commitment to creating a more equitable and accessible system (Government of Cape Verde).
Pension plans play a crucial role in reducing poverty and promoting social equity. In Cape Verde, the state-funded non-contributory scheme provides social pensions for the elderly and people in vulnerable situations, helping to improve the living conditions of around 64% of the working population, with the goal of reaching 66% (Island Express).
The economic impact is also significant, as the pension system contributes to the financial stability of households, promoting consumption and, consequently, economic growth. Studies indicate that extending the compulsory social protection system to include informal workers is essential to guarantee a broader and more sustainable contribution base (World Bank).
One of the main challenges facing Cape Verde's pension system is its financial sustainability. The high dependence on contributions from active workers to fund retirees' pensions makes the system vulnerable to demographic changes, such as an ageing population. To mitigate this risk, the government has explored strategies such as diversifying funding sources, including public-private partnerships and tax incentives to promote adherence to the contributory system (Government of Cape Verde).
In addition, initiatives such as the Cape Verdean Diaspora Investment Programme (PIDC) have been fundamental in channelling financial and technical resources to the social security system, strengthening its resilience and ability to respond to the needs of the population (S&D Consultancy).
Modernising the pension system is a priority for the Cape Verdean government, which has invested in digitising and decentralising the services provided by the INPS. The creation of mobile units to reach informal workers and the simplification of the REMPE scheme are examples of measures aimed at increasing the inclusion and efficiency of the system (Island Express).
At the same time, the revision of the family allowance to bring it into line with the poverty line and the introduction of additional benefits, such as those for families at the start of the school year, reflect a continuous effort to align social policies with the emerging needs of the population (Government of Cape Verde).
Pension and retirement plans in Cape Verde are fundamental pillars for building a fairer and more resilient society. By ensuring a stable source of income for retirees and promoting social inclusion, these plans contribute to reducing inequalities and strengthening the social fabric. In addition, their effective implementation is essential to achieving the objectives of the Sustainable Development Strategic Plan (PEDS II), which aims to eradicate extreme poverty and significantly reduce absolute poverty in the country (Government of Cape Verde).
The sustainability of the pension system depends, however, on continuous reforms and efficient management, which guarantee its adaptability to economic and demographic changes. Collaboration between the government, the private sector and civil society will be crucial to meeting future challenges and ensuring the well-being of present and future generations.
Between 2021 and 2023, Cape Verde saw a significant increase in social protection coverage, reaching 60.31 per cent of the population, which corresponds to 307,219 people. This progress was particularly noteworthy in the contributory system, which covered 91.6% of beneficiaries. This progress was achieved through collaboration between national and international institutions, such as the International Labour Organisation (ILO) and Portuguese Cooperation, which played a strategic role in strengthening the social protection system. (Government of Cape Verde).
There was also a special focus on women, who accounted for 62.21 per cent of beneficiaries, and on vulnerable groups such as children and the elderly. The coverage rate for children (0-14 years) totalled 47.81 TWD3T, while protection for the elderly reached 76.71 TWD3T, with 41,301 beneficiaries receiving old-age, disability or survivors' pensions. These figures underline the importance of the policies implemented to promote social inclusion and reduce inequalities. (Action Portugal).
One of the most impactful measures was the extension of maternity leave from 60 to 90 days and the introduction of fully subsidised paternity leave. These changes aim not only to improve the well-being of families, but also to promote gender equality. In addition, the government announced an increase in parental leave to 100 days, allowing it to be shared between parents. This measure reinforces the commitment to gender equality and child development. (Government of Cape Verde).
These changes not only benefit families directly, but also have wider economic and social implications. By allowing both parents to actively participate in raising their children, these policies can contribute to greater productivity at work and the reduction of gender inequalities in the labour market.
Another relevant measure was the introduction of the back-to-school allowance, aimed at relieving families of the cost of school materials. This initiative is particularly significant in a context where many families face financial difficulties, especially those living below the poverty line. The revision of the family allowance to bring it into line with the poverty line was also discussed, highlighting the government's commitment to aligning social policies with the emerging needs of the population. (Island Express).
These measures not only promote access to education, but also have a positive impact on reducing poverty and promoting equal opportunities. By investing in education, the government is building a solid foundation for the country's sustainable development.
The Cape Verdean government has been working on adapting the REMPE regime (Special Regime for Micro and Small Enterprises) to facilitate the formalisation of informal workers. This adaptation includes the creation of mobile units of the National Social Security Institute (INPS), aimed at reaching informal workers and integrating them into the social security system. These initiatives aim to increase social protection coverage and reduce informality in the labour market. (Island Express).
By integrating informal workers into the social security system, the government not only promotes social inclusion, but also strengthens the financial sustainability of the pension and retirement system. This strategy is crucial to guaranteeing universal social protection and reducing social and regional inequalities.
One of the most significant reforms under discussion is the elimination of the discrepancy in retirement age between men and women in the INPS system. This measure aims to guarantee gender equality in access to pensions, promoting a fairer and more equitable system. In addition, the introduction of early retirement in the social security system is being considered, allowing greater flexibility for workers. (Government of Cape Verde).
These reforms reflect a commitment to modernisation and fairness in the social security system. By addressing gender disparities and offering more flexible options for retirement, the government is creating a system that is more inclusive and adapted to the needs of the population.
The Statistical Bulletin on Social Protection, presented in 2024, has played a crucial role in monitoring and evaluating the policies implemented. This document provides a detailed analysis of data on contributory and non-contributory schemes, allowing for adjustments to public policies if necessary. Rigorous data analysis is essential to ensure the effectiveness of measures and to identify areas in need of improvement. (Government of Cape Verde).
The use of tools such as the statistical bulletin demonstrates the government's commitment to transparency and accountability. By making detailed, up-to-date information available, the government enables policymakers and social agents to make informed, evidence-based decisions.
This report presents a detailed analysis of the government measures implemented in Cape Verde in the field of social protection, highlighting their impacts and future challenges. The policies analysed reflect an ongoing effort to promote social inclusion, reduce inequalities and ensure the sustainability of the pension and retirement system.
The sustainability of the social security system in Cape Verde faces significant challenges, especially due to demographic ageing and labour informality. According to Cape Verde Demographic Estimates and Projections 2010-2040The proportion of elderly people in the population is increasing, putting pressure on the financial balance of the pension system. This phenomenon calls for structural reforms to ensure long-term viability, including diversifying funding sources and promoting greater adherence to the contributory system.
In addition, the high rate of informality in the labour market limits the contributory base. According to data from the Strategic Plan for Sustainable Development 2022-2026 (PEDS II)The formalisation of informal work is a strategic priority in order to increase economic inclusion and strengthen the social security system. The implementation of tax incentives and the simplification of enrolment processes can be effective measures to achieve this goal.
Economic inclusion is an essential pillar for reducing social inequalities. O Cape Verde State Budget for 2025 prioritises cohesion and sustainability, with an emphasis on measures that promote fair access to economic opportunities. These measures include support for youth and female entrepreneurship, as well as the creation of vocational training programmes adapted to market needs.
However, the effectiveness of these initiatives depends on their practical implementation and the ability to monitor the results. The creation of specific indicators to measure the impact of economic inclusion policies is crucial to ensure that resources are allocated efficiently and that the objectives of reducing inequalities are achieved.
While there are ongoing efforts to modernise the pension system, as mentioned in previous reports, this topic will address complementary aspects. While gender equality in access to pensions has already been discussed, the introduction of early and flexible retirement mechanisms needs to be explored. These mechanisms could include options such as the possibility of partial retirement, allowing workers to gradually reduce their workload while continuing to contribute to the system. This approach not only relieves pressure on the pension system, but also promotes a smoother transition to retirement.
In addition, diversifying the pension fund's investments is a crucial strategy for increasing its profitability and mitigating financial risks. Adopting sustainable investment practices in line with the Sustainable Development Goals (SDGs) can contribute to the stability of the system and the country's economic development.
Improving internal and external connectivity is a determining factor for economic inclusion in Cape Verde. According to Government of Cape VerdeThe increase in domestic and international flights, as well as the promotion of low-cost airlines, are priority strategies for 2025. These measures aim not only to boost tourism, but also to facilitate labour mobility and access to foreign markets.
However, it is essential to ensure that the benefits of these initiatives are distributed fairly between the different islands. The implementation of policies that promote balanced economic development between regions is fundamental to avoid the concentration of opportunities in specific areas and to foster territorial cohesion.
Education plays a central role in economic inclusion and in preparing the labour force for the challenges of the future. Although Strategic Plan for Sustainable Development 2022-2026 (PEDS II) acknowledges the progress made in the field of education, there is an urgent need to align school curricula and vocational training programmes with the demands of the labour market.
The introduction of technical and vocational courses in areas such as the energy transition and digitalisation can increase the employability of young people and contribute to a more diverse and resilient economy. In addition, strengthening partnerships between the public and private sectors can facilitate the creation of internships and apprenticeship programmes that prepare students for the labour market.
The digitalisation of social security services is an opportunity to improve the efficiency and accessibility of the system. The implementation of digital platforms that enable enrolment, payment of contributions and access to information in real time can simplify administrative processes and reduce operating costs.
However, it is crucial to ensure that digitalisation does not exclude vulnerable groups, such as the elderly and rural populations, who may have limited access to technology. Digital literacy campaigns and the provision of community access points are measures that can mitigate this risk and promote digital inclusion.
Finally, promoting economic resilience is essential for facing future challenges. Economic diversification, the transition to renewable energies and the creation of a favourable investment environment are key strategies for increasing Cape Verde's ability to withstand external shocks. O 2025 State Budget reinforces this commitment, emphasising the importance of an inclusive and sustainable economy.
Integrating circular economy practices and promoting emerging sectors such as the blue economy can create new job opportunities and reduce dependence on traditional sectors. These initiatives not only strengthen the economy, but also contribute to the country's environmental and social sustainability.
The study on pension and retirement plans in Cape Verde highlights their importance as fundamental pillars for the country's social and economic sustainability. The social protection system, made up of contributory and non-contributory schemes, has seen significant advances, such as the expansion of coverage for informal workers and the introduction of measures that promote gender equity and social inclusion. These initiatives, combined with the modernisation and digitalisation of services, reflect the government's commitment to ensuring a more accessible and efficient system, in line with the objectives of the Strategic Plan for Sustainable Development (PEDS II).
However, structural challenges persist, such as demographic ageing and high labour informality, which put pressure on the system's financial sustainability. Diversifying funding sources, formalising informal work and introducing flexible retirement mechanisms are essential strategies for mitigating these risks. In addition, promoting greater economic inclusion, through incentives for entrepreneurship and adapting training programmes to the demands of the market, is crucial to reducing inequalities and strengthening the contribution base. The implementation of policies based on rigorous data, such as that provided by the Statistical Bulletin on Social Protectionwill be decisive in adjusting the measures to emerging needs.
In short, strengthening Cape Verde's pension and retirement system requires an integrated approach that combines innovation, inclusion and sustainability. Collaboration between the government, the private sector and civil society will be indispensable to meet future challenges and ensure the well-being of present and future generations.
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