The Brazilian government estimates that the social security gap could double by 2060, according to the proposal for the 2024 Budget Guidelines Law sent in April.
The deficit of National Social Security Institute (INSS) should more than double by 2060 and quadruple by 2100, going from R$276,9 billion in 2023 to R$3,3 trillion in 2060 and R$25,22 trillion in 2100. Expenses with the payment of benefits social security costs will increase as a result of the country's aging population, which should become more pronounced in the coming decades. Without effective measures to reverse this trajectory, the deficit could be even greater than estimated, according to experts consulted by g1.
The demographic change in the country is the main reason for the increase in Social Security expenses. As the proportion of elderly people in the population increases, expenses with the payment of benefits also increase, which must be greater than the minimum wage. On the other hand, collection has been negatively affected by unemployment, informality and low wages, reducing contributions to the pension system.
Despite the Social Security reform in 2019, which instituted a minimum retirement age and minimum contribution time, among other measures, the social security fiscal situation remains challenging.
The 2019 reform, which may have reduced the social security gap by BRL 156,1 billion between 2020 and 2022, is still considered insufficient to deal with the increase in future expenses. According to Paulo Tafner, specialist in Social Security at the Institute of Economic and Applied Research (Ipea), there is still much to be done to make the brazilian social security system more sustainable.
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Tafner suggests that changes include equal minimum retirement age for men and women, raising the minimum retirement age for both genders, changes to rural retirement, changes to the Continued Cash Benefit (BPC) rules, and a funded layer mandatory in General Regime. Experts believe that the different criteria for granting pensions among different categories of workers is one of the main factors contributing to the Social Security's fiscal imbalance.
Leonardo Rolim, budget consultant for the Chamber of Deputies, also predicts the need for a new pension reform in the next decade
He suggests that the new reform also include the difference between the retirement age of urban workers and rural workers, in addition to measures to integrate the BPC with Social Security.
In order to reduce the impact of social security expenditures on public accounts, it is necessary to discuss not only the pension reform, but also other fiscal adjustment measures that increase government revenue, such as tax reform and the reduction of public spending in non-priority areas. In addition, it is necessary to seek innovative solutions that increase the efficiency of the social security system, such as the adoption of digital technologies that facilitate the identification and payment of social security benefits.
Facing the Social Security fiscal challenge in the long term requires political courage and a vision of the future on the part of government officials. It is necessary to discuss measures that guarantee the sustainability of the social security system, without neglecting the importance of protecting the most vulnerable workers and guaranteeing a social protection network for the poorest population.