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Pension System at Crossroads: Between Frail Solidarity and Financial Appropriation

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Social Policy Dismantling and De-democratization in Brazil

Part of the book series: Societies and Political Orders in Transition ((SOCPOT))

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Abstract

The chapter discusses the dismantling of Brazilian social security, debating the reform processes that shaped public pensions and paved the way for the advancement of private pensions in Brazil. It presents a double explanatory hypothesis: firstly, it takes into account the ambiguities that surround the historical approach to social security in Brazil, distancing it from a solidary conception, and weakening popular resistance to the dismantling. Secondly, it argues that successive pension reforms have been functional in the advancement of the financialization of the economy. Both hypotheses converge to a reflection on how the dismantling of social policies built a cyclical mechanism that links social security, public money, and financialization, leading to reforms that openly favor rentier accumulation.

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Notes

  1. 1.

    The notion of social security in Brazil involves Health, Social Assistance, and the Pension System within a perspective of universality, comprehensiveness and equality, approaching the Beveridgean notion instead of the classic Bismarckian contributory model.

  2. 2.

    As a matter of fact, from the point of view of the civil service pension system, the inequalities between the benefits of the elite of the republic and other servants (mostly in the areas of health and education) contributes to foster this logic. According to Medeiros and Souza (2014), the regressivity of the pensions of the fractions of the elite in government contributes with 4% of all income inequality in the country.

  3. 3.

    Decree No. 4682, of January 24, known as the Eloy Chaves Law. Before that, there were initiatives exclusive to the military and some civil servants, such as the “montepios.”

  4. 4.

    Whose contribution is not a fundamental requirement for access to social security benefits.

  5. 5.

    Brazilian Confederation of Retirees, Pensioners and Elderly (Cobap) and National Movement of Retired Public Servants and Pensioners (Mosap).

  6. 6.

    National Association of Tax Auditors of the Brazilian Federal Revenue Service (Anfip); National Federation of Fiscal and Fiscal Auditors of Urban Activities (Fenafisc); National Union of Fiscal Auditors of the Federal Revenue Service of Brazil (Sindifisco).

  7. 7.

    Together, the Chamber of Deputies and the Federal Senate make up National Congress, the bicameral legislative of the Brazilian national political system.

  8. 8.

    At that time, the deficits generated by the difference between revenue and expenditure were proportionally higher in the public segment than in the general regime administered by the INSS.

  9. 9.

    Proportional retirement allowed the taxpayer to retire earlier, but with a lower benefit. That is, before fulfilling the full requirements of retirement by age or retirement by contribution time.

  10. 10.

    The social security factor was an index used to compose the calculation of the INSS retirement value. When calculating the benefit, the worker’s average salary was multiplied by the factor corresponding to their age and time of contribution at the time of retirement.

  11. 11.

    ABRAPP—Brazilian National Association of Closed Pension Funds is a non-profit entity that represents the common interests of Closed Supplementary Pension Entities.

  12. 12.

    Then president of the Union of Bankers of São Paulo, who would eventually become minister of Social Security in the new government.

  13. 13.

    And agreement signed between the federal government and the states on social security and tax issues.

  14. 14.

    However, Funpresp, was only regulated in President Dilma Rousseff’s first term, in 2012, with the clear goal of becoming the largest pension fund in Latin America—a goal not yet realized.

  15. 15.

    Stemming from political factors such as the messianism of the Brazilian judiciary regarding the fight against corruption—as manifested in Operation Car Wash—and the intensification of the distributive conflict in a context of economic crisis—within which sociological interpretations point out that a discontented middle class shifted to the conservative political field—the fall of President Dilma Rousseff’s government meant the rise of an austerity agenda openly committed to carrying out reforms.

  16. 16.

    Inter-Union Department of Statistics and Socioeconomic Studies (DIEESE).

  17. 17.

    The equivalent to USD240 in 2019.

  18. 18.

    The equivalent to USD480 in 2019.

  19. 19.

    Despite the existence of the so-called traditional pension plan and the PGBL, the VGBL has been the great highlight of the accumulation insurance market, dominating over 90% of the current private pension market (SUSEP, 2019). In addition to tax incentives surrounding private pension plans, the portability authorized by SUSEP’s Circular 338/2007 to open entities is another contributing element for the growth of this segment, especially by bringing it closer to a traditional financial investment.

  20. 20.

    In 2019, this was equivalent to approximately USD160 billion.

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Authors and Affiliations

  1. Instituto de Pesquisa e Planejamento Urbano e Regional da Universidade Federal do Rio de Janeiro (Ippur/UFRJ), Rio de Janeiro, Brazil

    Fernanda Pernasetti

  2. Centro de Estudos Estratégicos da Fundação Oswaldo Cruz (CEE-Fiocruz), Rio de Janeiro, Brazil

    Fernanda Pernasetti

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  1. Center for Strategic Studies, Oswaldo Cruz Foundation, Coordinator of the Interinstitutional Study Group on Futures of Social Protection, Rio de Janeiro, Brazil

    Sonia Fleury

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Pernasetti, F. (2023). Pension System at Crossroads: Between Frail Solidarity and Financial Appropriation. In: Fleury, S. (eds) Social Policy Dismantling and De-democratization in Brazil. Societies and Political Orders in Transition. Springer, Cham. https://doi.org/10.1007/978-3-031-35110-5_5

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