A New Pension System in Brazil? An Evaluation of the Fiscal and Distributive Impacts of the 2019 Pen

This paper aims to calculate the fiscal and distributive impacts on the Brazilian National Pension Scheme, generated from the original version of the pension reform presented by the president Jair Bolsonaro in the beginning of 2019. This is the most comprehensive change in social security in Brazil. We use a micro-simulation modal that calculates the contributions to the pension system and old age and survivors' benefits over a 30-year period. The approval of the proposal would reduce expensas from USD 3.36 trillion to USD 2.65 trillion in the three decades analyzed. In the first 10 years, the net result would be USD 238 billion. Net pension liabilities would fall from USD 1.50 trillion to USD 857,50 billion, a sharp 42.74%ü reduction. The average replacement rate would fall from 73.99%o to 67.65%. The required contribution rate would reduce significantly from 42.70% to 32.87%. The average Intemal Rate of Return would fala from 2.37% to -1.00%. These results show that the reform would greatly reduce, but not eliminate, the pension deficit. There is a remarkable reduction in all pension indicators, particularly for Retirement by Age. The noticeable exception is the retirement by time of contribution for women.