This is what we like to call generosity …

Brazil spent last year over R$ 100 billion in pension payments for death beneficiaries. It’s a world record. The Brazilian government intends to make changes to laws governing Social Security, but the latest proposal sent to Congress was dropped because the economic team has not reached a consensus on the matter.

The R$100 billion is equivalent to 2.8% of the country’s GDP in 2011, according to the Secretary of Social Security Policies Leonardo Rolim. The number should go up even further this year. “Brazil is, obviously, the country which spends the most on pensions in the world.” The share spent by other countries is about 1.6% of GDP. “This makes it very clear that Brazil overly protects pensioners and retirees.” Of the total, R$ 60 billion goes to INSS beneficiaries (private sector) and R$40 billion goes to the public sector and military beneficiaries. Take this: there were 7.6 million workers in the private sector who have received this benefit last year.

In an interview, State Minister Garibaldi Alves Filho showed dismay about a congress vote on the issue. “We had the expectation of a quick vote in Congress, but the thing has lost momentum.”

He explained that the main issue at the table is setting the minimum age for new retirees, which would be progressively increased according to the aging population. “The lawmakers want to vote, but they may not accept the new terms.” Garibaldi said that the way the law is written today, even when a grantee who loses her father comes of age, her payments is transferred to the mother. “This means the payment never ends.”

“The way the system is set up now, it’s an injustice,” Rolim summarized.

The social security deficit is a major issue in the country, but changes to the pension system are difficult to get congressional approval because they are unpopular.

Source: Estadao

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