Pension in Brazil: Outcomes and the pending agenda

Brazil’s social protection policies have recently received a great deal of international attention, and are upheld by some as an international model. The most noted achievements include the creation of special budget for social security (known as “Seguridade”), the extension of benefits to rural workers, and the creation of a benefit floor set at the minimum wage. With these measures, Brazil has achieved 97% coverage of individuals 65 years or older. The creation of the well-known Bolsa Familia program was also an important milestone in targeting the basic needs of the poorest families while promoting education and fighting child labor.

This system has distinct costs, which rose between 1980 and 2000 when per capita income grew at reduced rates. This generated a public debate between those who defended “Seguridade” and those that saw its rising costs as an obstacle to generating sustainable economic growth.

In recent years, income transfers from “seguridade” guaranteed the activation of internal demand during moments of crisis and helped Brazil overcome the challenges of the international economic crisis. Furthermore, these transfers helped to reduce poverty and inequality, which is essential to reducing regional inequalities. Expenditures on “seguridade” account for the largest share of public spending in Brazil.

But, the challenges of removing the mechanisms of ineffective spending, high administrative costs, and anachronistic regulations complicate efforts toward modernization and improved equity. In this paper, we will present both an assessment of the achievements thus far with respect to reductions in poverty and inequality, as well as an analysis of the remaining policy challenges that need to be overcome in order to generate conditions for sustainable development.