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Influenced by the system created in Chile in the 1980s, almost all Latin America already adopts in its social security program the capitalization – model that Jair Bolsonaro wants to implement in the country and in which each worker has an individual account to safeguard his retirement . The main exceptions are Brazil, Argentina, Paraguay and Venezuela. In Europe, the model is also progressing, particularly in the face of fiscal imbalances in the public accounts of countries.
The difference between Chile and the rest of the world lies in the fact that after the problematic experience of Chile most countries have adopted the model as one of the pillars of retirement system. The hybrid model, which is prevalent in the world today, is generally based on a social protection pillar ( funded by the government and for which it is not necessary to have contributed to profit ), a failure ( Brazilian, where current workers foresee the withdrawal of the inactive ) and a capitalization.
England, New Zealand, Hungary and Poland, among others, have a compulsory capitalization component in their hybrid systems. In Latin America, Peru, El Salvador and the Dominican Republic, capitalization is also compulsory. In Colombia, workers can choose the system.
In some countries, capitalization functions as a compulsory supplementary pension. To encourage workers to save on their individual accounts, governments have set a low ceiling for the pay-as-you-go pillar, which also helps to reduce the country's pension deficit.
In Denmark, for example, the distribution ceiling is about US $ 1,000, says Felipe Bruno, head of the social protection sector of the Mercer consultancy in Brazil. If the worker wants to receive more than that in old age, he has to save on his own.
According to Mercer's second survey, Denmark now has the second-best social security system in the world behind the Netherlands – both models are similar and adopt the three pillars. In the consultation methodology, the systems of the two countries received a score of 80 on a scale of 0 to 100. Brazil has 56.5 points, which places it in 21st place out of 34 countries. Considering only the adequacy of the sub-indicators ( evaluating the benefits of social security ), Brazil climbs to 7th place; but when the sustainability of the system is badyzed, the country is in 4th place.
"The lowest scores usually come from countries where there are demographic problems and where the value of pensions approaches the worker's last salary," says Bruno.
A survey by the Inter-American Development Bank shows that Brazilians who retire on an age-related basis usually receive 80% of their salary and those who retire based on contributions, 52%. The Latin American average for pay-as-you-go systems is 65%.
Challenges
Implementing the pillar of capitalization in a pension system is usually more difficult when the country's fiscal situation is delicate, as in the case of Brazil. Indeed, a portion of the funds raised from current employees is no longer intended for retirees and is migrating to individual accounts.
The transition is also more complicated when the contribution rate of workers and companies is already high – higher than 18% – according to experts. The difficulty comes from the need to increase the contribution in order to finance the transition. In countries where there is no room for rate increases, the government often has to reduce the benefits of the old system.
In some Eastern European countries that attempted to integrate the capitalization pillar, the transition was halted during the 2008 crisis because of these barriers. In Brazil, the aliquots that fall on the worker vary from 8% to 11%
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