Pension Reform in Brazil

Brazilian lawmakers overwhelmingly approved the foundations of a new pension reform since 2019 (379 votes against 131).

Brazil, the seventh most populous country in the world and the twelfth largest economy, will finally introduce a minimum retirement age.

I – Economic Impact of the Reform

The reform proposes that Brazilians work up to 10 years longer, which should save around $240 billion and increase economic output.

Currently, Brazilians can retire after just 35 years of service (30 years for women), and many can retire after their fifties.

II – What about savings and productivity gains?

If adopted, this reform would set the retirement age at 65 for men and 62 for women, resulting in $236 billion in savings over 10 years.

In addition to savings, additional years of work increase workers’ productivity and economic contribution.

III – Positive reaction from investors

Investors have welcomed the reforms. The value of the Brazilian real has increased due to reform expectations, and stock prices have also risen.

Investors expect improved confidence and a strong growth profile, said Alberto Ramos, chief economist for Latin America at Goldman Sachs.

The reform still needs to go through a few bureaucratic steps before taking effect, but initial approval by the House of Commons is an encouraging sign.

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