Government estimates that social security gap should double by 2060; analysts see need for further reform in the future

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According to the government, the trajectory is estimated, fundamentally, because of the ‘accelerated process of population aging in Brazil’. Social Security Agency; INSS Divulgation The deficit of the National Institute of Social Security (INSS), the public system that serves private sector workers, should more than double by 2060 and quadruple by 2100, according to estimates by the Secretariat of the General Social Security Regime of the Ministry of Social Security . The numbers appear in the proposal for the 2024 Budget Guidelines Law, sent by the economic area to the National Congress in April. According to the government, the social security gap foreseen for this year is R$ 276.9 billion, equivalent to 2.6% of the Gross Domestic Product (GDP). The projection is that the negative result will advance in 2060 to R$ 3.3 trillion or 5.9% of GDP and, in 2100, to R$ 25.22 trillion – 10.4% of GDP. Comparison in proportion with GDP is considered more appropriate by specialists. According to the Ministry of Social Security, the increase in the social security gap, which is the difference between INSS revenues and expenses, is related to the estimated increase in expenses for the coming decades. The logic is that, with the increase in the proportion of elderly people in the country in the future, expenses with the payment of social security benefits will also grow — which cannot be less than a minimum wage. “It is observed that a decline in expenditure in relation to GDP in the coming years, however, with a resumption of growth from 2029 and reaching, in 2100, R$ 37.22 trillion (15.36% of GDP). Such trajectory is guided, fundamentally, by the accelerated process of population aging in Brazil”, informed the government. According to Social Security specialist Paulo Tafner, economist at the Institute of Economic and Applied Research (Ipea), the social security gap may be even greater than estimated, since, in his view, the government used optimistic projections for growth of GDP. Recent Social Security Reform The increase in the social security gap, estimated by the Ministry of Social Security, will happen despite the Social Security reform made in 2019 in the first year of the Jair Bolsonaro government. REMEMBER WHAT CHANGED WITH THE PENSION REFORM Among the changes, a minimum retirement age of 62 years for women and 65 years for men was established. A minimum contribution period of 15 years for women and 20 years for men was also defined. A points system was determined in the transition rule, which involves the minimum contribution time and age, in addition to changes in the calculation to obtain the full benefit. With the changes, the former Ministry of Economy, then led by Paulo Guedes, estimated, in 2019, that the reform would have a potential impact of reducing the social security gap from BRL 800 billion to BRL 1.07 trillion in ten years. At the end of 2022, an estimate pointed out that the resource savings provided by the Social Security reform between 2020 and 2022 may have reached R$ 156.1 billion, an amount 78.8% higher than expected for the period at the time when the text was approved by Congress (R$ 87.3 billion). New reform needed According to economist Paulo Tafner, projections for the social security gap show that a new Social Security reform will be necessary in the coming years. “I imagine that this government holds [sem fazer uma nova reforma]. Ultimately, if not in the next government, in 2026, the person elected in 2030 will have to do this. Because the deficit will start to escalate, or he governs or pays Social Security “, declared Tafner, to g1. For him, although the 2019 reform is the best ever made in the social security system and has in fact prevented greater deficits in recent years, it it is “unfinished”. “Several points remain pending, which put pressure on spending and the deficit. With an aggravating factor, now we are going to start accelerating the percentage of elderly people in the population. It’s going to get much worse, that’s why the deficit grows”, said the analyst. Tafner listed some points that can be implemented, according to him, to promote greater sustainability in the future for the Brazilian social security system. They are: Equality of the minimum age of pensions for men and women Increase in the minimum age, for both genders, to 67 years old Change the rural retirement, with an increase in the minimum age (currently, it is 55 years old for women and 60 for men) Change the rules of the BPC (Benefit of Prestação Continuada), which is welfare, or setting a different minimum age (greater than the social security rule), or keeping the minimum age equal to the INSS and reducing the value of the benefit (paying below the minimum wage) Chamber of Deputies, Leonardo Rolim, former president of the INSS and former secretary of Social Security in the Bolsonaro government, agrees that a new reform of Social Security will be necessary in the future. “I imagine that in the next decade”, he added. According to him, it will be necessary to attack some points such as: age difference between men and women urban and rural age difference lack of integration between the BPC (non-contributory layer) with social security creation of a mandatory capitalization layer in the General System, with low transition cost

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