The Brazilian pension model: The pending agenda

Abstract

To achieve national goals defined by the 1988 Brazilian Federal Constitution, cash benefits alone are insufficient in the absence of more robust social services to reduce inequalities and improve social cohesion. The Constitution, albeit of national importance and international significance, has not addressed many institutional and administrative weaknesses in the design of the national pension system. Although coverage has been increased and inequality reduced, these measures are not sufficient. Brazil's ambitions to further develop social policies (and, indeed, to live up to its accorded international status as a social policy leader) may be constrained by an over‐reliance on conditional cash transfers such as those provided under the Bolsa Família programme. Brazil faces a major political‐economy challenge in addressing all these issues because the policy reform process is difficult, and, more importantly, because of the embedded role of vested interests. Moreover, Brazil must tackle these issues in the face of growing fiscal pressures, which could weaken the current political legitimacy of social policy and undermine important recent successes.

Non-Contributory Benefits, Pension Re-Reforms and the Social Protection of Older Women in Latin America

“…The Brazilian pension system was not privatised as part of the structural economic reforms as others in the region. However, a number of reforms have been geared to tightening eligibility due to concerns over financial sustainability (Rocha da Silva and Schwarzer, 2003; Schwarzer and Ferreira de Santana, 2013; Matijascic and Kay, 2014). There was also an expansion of complementary pension schemes of funded occupational and individual accounts (closed and open pension funds), but no replacement of public with private pensions as in other countries (Antía and Provasi Lanzara, 2011).…”

Understanding the Brazilian social policy model: Myths, milestones and Dynamic Social Security

“…The framers of the 1988 Constitution also sought to reduce stratification in access to social benefits, but did not achieve that goal. Matijascic and Kay () argued that the rules for pension entitlement favour more those groups with greater voice. Below, a similar argument is made with respect to other social policies.…”

“…The reforms: Removed both gender‐based and urban‐rural differences in benefits; Universalized health coverage, reaffirming the trend since the 1970s of delinking social rights from pensions contributions; Established social assistance and rural pensions equal to the minimum wage that were delinked from ordinary contributory pensions, and reduced the minimum age for eligibility. The question of how to finance social policy has been a major policy challenge. Some workers contribute regularly, but most do not – less than 20 per cent of workers retire after contributing regularly for 30 or 35 years (Matijascic and Kay, ). The financing arrangements established in the 1988 Constitution are intended to compensate for workers' differing contribution rates through redistribution.…”

“…The Brazilian social protection system's wide range of performance and management challenges is widely known. For example, Matijascic and Kay () describe how Brazil's National Institute of Social Security (INSS) spends 3.7 per cent of its budget on administrative costs, which is far superior to the 0.5 per cent spent by the United States Social Security Administration. Brazil's education system also faces serious problems.…”

“…There are challenges that must be met in order for Brazil to be considered a truly Dynamic Social Security system, including some specific issues when it comes to pensions (Matijascic and Kay, ), which include: It is possible to receive a pension and work full‐time, which mitigates against reducing unemployment and shrinking the informal sector. Retirement is thus a way to improve worker earnings without a shift in status in the labour market. Survivorship pensions are for life and without qualification or restriction, that is, regardless of age, marital status, or labour market participation. There are insufficient regulations for disability benefits, leaving discretion to the authorities granting benefits.…”