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Weekly Chart: The Burden of Brazil's Pensions

March 09, 2017

Come 2050, the IMF projects Brazil will spend a significant amount of its GDP on pensions—26%. by @luisaleme
Brazil’s retired population is projected to grow 260% by 2060. Covering the costs won’t be easy.

Brazilians returned from Carnaval to face an economic headache: GDP figures for the fourth quarter of 2016 showed a steeper-than-expected contraction of 0.9 percent. The numbers put pressure on President Michel Temer’s government to secure the country’s coffers, recover jobs, and attract investment. And one target to trim fat in Brazil’s public spending is through an unpopular pension reform.  

Temer proposed the contentious austerity measure in December of 2016 and a first vote on the reform is expected in May. In addition to establishing a retirement age for the first time of 65 years for men and women, the government proposes raising the minimum number of years of contributions before workers become eligible to receive full benefits from 25 to 49 years, as well as a gradual transition to the new system for men currently over 50 and women over 45. The plan faces criticism, but proponents see it as a primary way to fix the economy as the Brazilian pension system is responsible for nearly 97 percent of the public spending deficit

AS/COA Online looks into why pensions weigh so heavily on the current and future Brazilian economy.