Brazil has less than 2 taxpayers for each beneficiary

A study published this week by the Institute for Applied Economic Research (Ipea) shines a yellow light on the Brazilian pension system. The survey shows that the country currently has less than 2 contributors for each Social Security beneficiary, which indicates a likely deterioration in the future.

From 2051 onwards, according to projections, the tendency is for there to be more insured people than people who contribute to Social Security. The estimate takes into account all social security regimes (RGPS, RPPS and military) and the Continuous Payment Benefit (BPC), but does not include benefits such as maternity benefit and the old sickness benefit.

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According to the study, published by the newspaper Economic value, the ratio fell from 2.26 contributors for each beneficiary (in 2012) to 1.97 (in 2022). Projections indicate that the ratio should fall to 0.99 in 2051, until reaching 0.86 in 2060.

This means, in practice, that, if the conditions are maintained, there will be more beneficiaries than contributors to Social Security in Brazil from 2051 onwards.

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Also according to Ipea, in absolute numbers, the projection is that the total number of beneficiaries for retirement, death pension and BPC will increase from 31.4 million (in 2022) to 61.2 million (in 2051). In 2060, this contingent would reach 66.4 million people – more than doubling in a period of almost 40 years.

In relation to Social Security contributors, the estimate would fall from 61.8 million (2022) to 60.6 million (2051) and 57.2 million (2060).

What explains the numbers and why they are worrying

According to Ipea researchers, the phenomenon is mainly due to the maturation process of social security systems and the rapid aging of the Brazilian population. Informality, unemployment and inactivity also help to explain the increase in the number of non-contributors.

In 2022, according to the study, more than half of Brazilians (55.5%) of working age were not contributing to Social Security. In absolute numbers, out of a total of 129.5 million people, only 58.9 million were contributors (45.5%), while 70.7 million did not contribute.

“With these demographic trends, it is expected that, in the coming decades, the increase in the total number of beneficiaries will not only continue at a higher rate than the total number of taxpayers, but it may also reach a situation of stagnation or even retraction of this last group , given the expected decrease in the working-age population”, write the researchers.

The survey was based on data from the Continuous National Household Sample Survey (Pnad), from the Brazilian Institute of Geography and Statistics (IBGE), carried out in 2018, in addition to administrative records from social security systems.

“The worsening trend in the relationship between taxpayers and beneficiaries is the main diagnosis and tends to continue even with a new population projection, the results of which could even worsen the indicator even further”, note the researchers.