Welfare: country distribution and capitalization are combined; to learn how it works | Economy

But in the pension reform proposal to be submitted to Congress, President Jair Bolsonaro's economic team has already indicated its intention to promote a change in the capitalization regime – in which benefits are paid by contributions paid in the past. workers.

• Understanding the Functioning of the Pension Fund Capitalization Model

In Nordic countries such as Sweden and Norway, among others, the system is a hybrid system, also called "virtual accounts" or "national accounts" . midway between pay-as-you-go and pay-as-you-go schemes. This system establishes minimum retirement ages, usually above 60 years.

In the system of virtual accounts, the contributions of active workers finance the benefits of retirees and retirees – as in a pay-as-you-go system – but benefits are calculated on the basis of past beneficiary contributions accumulated and indexed by "virtual" interest rates – as in an individual account of a capitalization system.

According to the experts, this system could be the solution to avoid the billionaire losses in the desired transition by the Bolsonaro government from distribution to capitalization – an equation that the economic team is currently studying.

These changes in regime change, which, according to economists, could exceed $ 400 billion in the Netherlands, are due to the fact that, once the capitalization system is adopted, workers would contribute to their individual retirement, not paying the benefits of workers who are already retired.

According to the legislative counsel of the Federal Senate, Pedro Fernando Nery, who has studied the system of virtual accounts, is used in countries such as Sweden, Norway, Latvia, Poland and Italy. 19659010] Other countries, such as Mongolia, Kyrgyzstan, Azerbaijan and Turkmenistan, Egypt, Africa, also has virtual account systems, though with distinctions to European design

For him, the system of "virtual accounts" would benefit from the two regimes: the solidarity of financing through distribution and the clearer relationship between the contribution and the benefit of the capitalization system.

In the accounts of the badyst, the simple transition of a No, currently in force for capitalization would cost about R $ 407 billion for the National Institute of Social Security (INSS), which addresses private sector workers, and R $ 15.7 billion for civil servants.

In the hybrid system, according to Nery's badessment, there would be no loss when switching from a pay-as-you-go system to a capitalization system because the active contributions of the workers would continue to finance social security benefits and nothing would be invested in the financial market.

According to Paulo Tafner, social security specialist who also helped the current economic team to make proposals, the adoption of this system could help prevent losses with the pbadage of the capitalization to distribution. "The advantage is that he does not lose any income," he said.

However, he felt that the scheme is not a "trivial understanding" and that this could lead to difficulties in understanding.

"Imagine that his money is there, but it's not there.This is not capitalization, although it simulates the capitalization.But imagine explain this to the Brazilian worker," he said. declared.

He recalled that in Sweden, where this system is applied, people have a higher level of education and homogeneity of income.

"Over there [Suécia] it was difficult to understand, it's an interesting system, it has a lot of merits, because it helps to balance the distribution system, but it's quite complicated for a worker to average size in the country, but he does not have the money, "he said.

] (GDP), that is, they depend on productivity and employment growth, reflecting the very ability of society to pay for it. It also takes into account life expectancy.

However, this scheme transfers the demographic and economic risks to the beneficiary. If, for example, the wage bill, productivity and employment decrease, the value of the benefit also decreases.

According to the legislative consultant, Pedro Nery, this system was put to the test in Sweden, where he was born after the European crisis, as automatic adjustments resulted in consecutive annual reductions in the value of benefits.

"Despite political pressure, the government has developed the design of the system, which remains unchanged.It is feared that the reductions in case of economic downturn have a monthly limit," he said in his study on the subject.