What are the main results? Impact on people’s lives

3. What are the main results? Impact on people’s lives

The system has been efecive in reducing extreme poverty among older people. Considering the World Bank’s extreme poverty line of USD1.90 PPP a day, poverty among people aged 65 and over in 2014 was negligible (0.4 per cent), even more when compared to the 7.2 per cent extreme poverty rate found for children 15 years old or younger. Despite eforts made in the last dec- ade (including the implementaion of Bolsa Família, a social assistance pro- gramme which targets families with children), poverty rates for those aged

15 years or under coninue to be al- most twice as high as the average and almost 20 imes higher than for older

women increased more than threefold (by impressive 12.8 percentage points) over the same period. The diference between coverages of men and women, which used to be of 14.2 percentage points in 1992, decreased to only 5.5 percentage points in 2014; however, coverage remained higher for men. What to expect from diferences in old age social protecion coverage for men and women in the future? The diference tends to be even smaller than today’s, simply because social security coverage rates for working-age men and women have become very similar in recent years, unil they became the same in 2014 (see Figure 2).

Figure 1. Old-age social protecion coverage: percentage of populaion aged 65 or over that receives a pension (1992-2014)

Source: Naional Household Sample Survey— Brazilian Insitute of Geography and Staisics (IBGE), several years.

Source: Naional Household Sample Survey— Brazilian Insitute of Geography and Staisics (IBGE), several years.

Brazil: Universal old-age pensions

people (see Figure 3).

Overcoming constraints

Figure 3 also suggests what could hap- pen in Brazil if social security and social Although the Brazilian social protecion assistance beneits were exinguished: system has produced remarkable the extremely poor would comprise results in terms of high coverage and

13.2 per cent of populaion (rather than very low extreme poverty for older the observed 3.9 per cent) and extreme people, and taking into account the poverty would dramaically afect older fact that social beneits tend to have a people during a period when they are relevant efect on the overall economy, no longer able to generate income.

the costs of the system have become an increasing concern. As of 2013,

Impact on the economy

expenditures with social security and tradiional social assistance beneits

These transfers also have an impact on (excluding Bolsa Família) represented the economy as a whole. The muliplier

12.3 per cent of GDP (see Table 2), an efect of expenditures in government unexpected cost for a country with a transfers on GDP computed by relaively young demographic structure. Mostafa et al. (2010) are above 1 for:

social assistance beneits paid to older Table 2. Expenditure with social protecion people and the disabled (1.38); and beneits—Brazil, 2013

beneits paid by the General Regime of

Social security beneits –

Social Security (1.23). This means that

civil servants (A) 209.5 4.0%

a marginal increase of 1 per cent of GDP in expenditures for these beneits

Social security beneits –

private sector (B) 357.0 7.4%

would produce an increase higher than 1 per cent in GDP.

Social assistance beneits (C)

Figure 3. Extreme poverty in Brazil (USD1.90 Unemployment insurance (D)

PPP/day) with and without social security and social assistance beneits, by age—2014

Abono Salarial (E) (salary bonus –passive

employment policy) Bolsa Família (F)

24.0 0.5% Total (A+B+C+D+E+F) 667.1 13.8%

Social insurance + social assistance beneits

(A+B+C)

GDP 4,844.8 100% Source: Brazilian Ministry of Planning and the Brazilian

Source: Naional Household Sample Survey—Brazilian Insitute of Geography and Staisics (IBGE). Insitute of Geography and Staisics (IBGE). 2014.

Brazil: Universal old-age pensions

Brazil is a clear outlier when compared Expenditures with social insurance to other 86 countries in Lain America have been increasing relaively and the Caribbean, North America, quickly. For beneits paid by the Europe, Oceania and Asia. Slightly General Regime alone, expenditures over 10 per cent of Brazil’s populaion increased an addiional 2.5 per cent is aged 60 or over, yet the country’s of GDP since the irst half of the expenditures with pensions is similar 1990s. The forecast for the next 45 to countries with 25 per cent of their years suggests an increasing burden populaion belonging to this age for society, since Brazil (as most group (see Figure 4).

countries in Lain America and the Caribbean) is experiencing a process

Figure 4. Social pension expenditures as a

of ageing that is expected to be

percentage of GDP and as a proporion of

twice as fast as the one that was

people aged 60 or over (Brazil as of 2010)

experienced by developed countries. The percentage of the populaion aged 60 or over is expected to increase from 10 percent to 20 per cent over only 25 years in countries of Lain America and the Caribbean— compared to an average period of

50 years for member countries of the Organisaion for Economic Co- Operaion and Development (OECD). All the evidence suggests that a pension reform is necessary to keep

Source: for Brazil: Ministry of Social Security (expenditures of the General Regime of Social

the system inancially sustainable.

Security and old-age social assistance pensions), Ministry of Finance (expenditures of the Special

This reform would be the third one of

Regime of Social Security) and the Brazilian Insitute

its kind ater the re-democraisaion

of Geography and Staisics (demographic data). Other countries: World Bank and the United Naions.

of the country: pension reforms were

Table 3.Key indicators: Brazil social security and tradiional social assistance beneits (excluding Bolsa Família)

Number of persons

16.8 million people aged 65 or over (as of 2014).

covered

Source: Naional Household Sample Survey, 2014.

Low-paid beneiciaries have 100 per cent replacement rate, since the

Adequacy of

beneits

basic level of social security beneits and the level of social assistance beneits is equivalent to one minimum wage.v

The overall expenditure with social security and social assistance

Sustainability of

beneits was over 12 per cent of GDP as of 2013, which is substanially higher than expected for a demographically young country.

the system

Source: Author’s elaboraion.

Brazil: Universal old-age pensions

conducted in 1994-1998 (General Regime) and in 2003 (Special Regime) (Caetano et. al., forthcoming).

This Universal Social Protecion brief was produced by Luis Henrique Paiva, Researcher at the Insitute for Applied Economic Research (Ipea) and Associate Researcher at the Internaional Policy Centre for Inclusive Growth (IPC-IG), UNDP. It was reviewed by Isabel Oriz and Loveleen De of the ILO.

References

Barrientos, Armando. “The rise of social assistance in Brazil” (2013). Development and Change Vol 44, No 4.

Caetano, M., L. Rangel, E. S. Pereira, G. Ansiliero, L. H. Paiva & R. N. Costanzi (forthcoming). O im do fator previdenciário

e a introdução da idade mínima. Texto para Discussão. Brasília: Ipea.

Mostafa, Joana, Pedro H. G. F. de Souza & Fábio Vaz. 2010. “Efeitos econômicos do gasto social no Brasil”. In Perspecivas da políica social no Brasil, organised by Jorge A.

de Castro et al. Brasília: Ipea.

Cabo Verde Main lessons learned

• The case of Cabo Verde shows

Universal Pensions that rapid progress towards

the universalizaion of pension systems is feasible and afordable in developing countries. Strong commitment by the Government

is a key ingredient.

One step further in achieving social

protecion for all

• The rapid expansion of pension coverage was achieved by

Cabo Verde has given social combining contributory and protecion a high priority on the

non-contributory programmes. road to development, showing a way to combine growth with equity

• The creaion of a specialized in a context of scarce resources.

management insituion -the The country is now one of the most

CNPS in Cape Verde- is a criical advanced naions in Africa in terms of

factor to unify exising programs establishing a social protecion loor.

and keep the strategy on-track. Cabo Verde took two major steps

• Sharing exising infrastructure towards a universal pension system:

with other social protecion the creaion of the Naional Centre

programmes and insituions of Social Pensions (CNPS) in 2006 and

(post oice services, local the uniicaion of pre-exising non-

governments and organizaions, contributory pension programmes.

and the private sector) allows This uniied scheme guarantees basic

pension schemes to cover more income security for the elderly over 60

people and save costs. years old, the disabled, and children

with disabiliies living in poor families. • The use of informaion Social pensions in Cabo Verde have

technology further enables reduced the level of poverty and

transparent, accountable, and sound management by creaing

vulnerability of its target populaion. It linkages between databases is also a concrete step in the direcion for cross-checking of data and

of establishing a more comprehensive reducion of duplicates. social protecion loor.

The social pension covers about 46 per cent of the populaion 60 years old and over, and the value of the beneit is near 20 per cent higher than the poverty line.

Cabo Verde: Universal Pensions