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Pension reform seen as crucial for ailing Portugal

LISBON, Portugal (AP) -- A leading international economic body says Portugal must push ahead with changes to pension entitlements, even though the planned reforms are threatening to tear apart the coalition government and will likely trigger a spate of legal challenges.

The Organization for Economic Cooperation and Development said in a report Tuesday that recalibrating pension entitlements and scrapping early retirement are key steps for Portugal as it strives to restore its fiscal health.

Portugal needed a 78 billion euro ($101 billion) bailout in 2011 to avoid bankruptcy.

The OECD, which groups 34 of the world's richest economies, said Portugal's rapidly aging population is jeopardizing its social security system.

It recommended making some pension changes retroactive but a government proposal to do that has brought an outcry, with experts saying it would be unconstitutional.