Brazil forecasts $270 billion spared after pension reform

Brazilian Economy Minister Paulo Guedes said the reform in Brazil’s pension system is likely to lead to at least $270 billion being spared over the course of ten years in the country. The statement was made Tuesday (Feb. 5) during a press conference in Brasília next to lower house speaker Rodrigo Maia, who said the topic could be brought to vote at the lower house by May.

“We’ve simulated [the reform] for 15 years, 20, and ten. $270 billion is for ten years, but some simulations have $270 billion for 15 years. This is what’s being calibrated,” the minister declared. Guedes once again criticized the current pension system, which, he says, deepens social inequalities and contributed to unemployment.

“Brazil has some 96 million economically active people and 46 million do not contribute and will grow old. They will bring the pension system to collapse. Our challenge is not just saving the pension system but also prevent it from being a wicked mechanism for income, and at the same time to rid future generations of the trap that previous generations fell victims of, which was the construction of a system that aggravates inequality and brings about the mass destruction of jobs,” he added.

Minimum age

When asked about the introduction of a single minimum age of 65 years old for both men and women—as stipulated in an excerpt of what is believed to be the text of the legislation, leaked on Monday (4)—Guedes stressed that the final decision will be made by the president.

“You know that the stance of Deputy Rodrigo Maia, for instance, is that the [minimum age for retirement] is the same [for men and women], also because women have a higher life expectancy rate. But the opinion of President Bolsonaro was always against it—that women should be given a lower age,” the minister pointed out.

Should the minimum age be 62 for men and 57 for women, as the president himself mentioned last month, Paulo Guedes said the amount spared would total less than $270 billion. In this scenario, however, the rules for the transition could be more strict.