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The government will incorporate the capitalization model into the social security reform proposal that will be forwarded to Congress in February, said Economy Minister Paulo Guedes on Tuesday.
The capitalization is a kind of savings that the worker realizes to secure his future retirement, in which the money is invested individually, that is to say that he does not "mix" not with other workers. The current model is distribution, in which the contributor pays the benefits of those who are already retired.
The idea is that capitalization should gradually replace the current system. This migration was proposed in the Bolsonaro government's plan during the election campaign.
According to Guedes, the current distribution model is not viable due to the aging of the Brazilian population. Brazil is experiencing a demographic transition in which the number of older people dependent on active workers increases each year.
According to the Brazilian Institute of Geography and Statistics (IBGE), Brazil's dependency ratio will rise from 11% currently to 36% by 2050. That is, for every 100 adults able to contribute 36 support
Today, it is important to note that, the minimum amount paid to retirees is a minimum wage that has been set in 2019 to R $ 998. The ceiling of benefits of the INSS was R $ 5,645.80
According to Paulo Tafner, author of one of the proposals of the reform of the Guedes team , the capitalization plan must be put in place gradually, in order to avoid a loss of income when switching from one model to the other.
Indeed, if the capitalization is implemented immediately, retirees active contribution of workers, aggravating the deficit of social protection. [19659012] The distribution model already exists in some countries, such as Chile, which reformed its pension plan in the 1980s. Each worker creates his own savings on an individual account and there is no collective fund for this.
Today, all Chilean workers are required to pay at least 10% of their salary for 20 years to retire. Employers and the government make no contribution.
This money is managed by companies that invest "savings" in the financial market. However, the system has been strongly criticized for the low pension value, which is below the Chilean minimum wage.
According to Carlos Heitor Campani, professor of finance at Coppead / UFRJ, Chile has managed to make the transition from a social security model, but today it pays an account and has characteristics different from those of Brazil because his country is much smaller.
"More radical change measures for the capitalization regime were easier to cross through the political system [daquela época]and in Brazil we would have much more difficulties," he says.
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