This brief report highlights the fact that in the 80s and 90s, many Latin American countries carried out radical reforms to their social security systems, due to the lack of sustainability of the public PAYGO systems. In the case of Brazil, however, Governments carried on making partial reforms for reducing fiscal deficits, thus delaying deeper reforms. Thus, by the end of 2015, this country had one of the largest pension expenditures with respect to GDP (11.3%), which is expected to reach 14% of GDP by 2018, 18% of GDP by 2030 and 26% of GDP by 2050 if reforms are not introduced.

The reasons for the increasing pension expenditure in Brazil are related to two factors: (i) the aging of the population, which is aggravated by the possibility of people retiring at relatively low ages (most people are eligible for retirement at age 50, depending on the number of years of contribution and the employment category); (ii) the increasing average replacement rates of the system.

In view of these circumstances, a comprehensive reform of the Brazilian pension system is now urgent.

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