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)| false Schmidt, M.I., Duncan, B.B., Azevedo e Silva, G., Menezes, A.M., Monteiro, C.A., Schmidt, M.I., Barreto S.M., Chor, D., and P.R. Menezes, 2011, “ Chronic, non-communicable diseases in Brazil: burden and current challenges, The Lancet Series, No. 9781, Vol. 377.
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)| false “ Victora, C.G, Barreto, M.L., do Carmo Leal, M, Monteiro, C.A., Schmidt, M.I., Paim, J., Bastos, F.I., Almeida, C., Bahia, L., Travassos, C., Reichenheim, M., and F.C. Barros, Health Conditions and Health-Policy Innovations in Brazil: The Way Forward,” The Lancet Series, No. 9782, Vol. 377.
Prepared by Izabela Karpowicz and Carlos Mulas-Granados with support from Mauricio Soto and Kamil Dybczak.
COFINS and CSLL are social security revenues. There are numerous exceptions to standard contribution rates which lower the effective rates.
Contributions to pension plans are tax-deductible, up to certain limits, for both the employee and the employer. Pension benefits are taxed as ordinary income.
The percentage varies depending on the public entity.
In Brazil, some of the pension system benefits have social assistance features which complicates the cross-country comparisons. Social benefits in other countries may be included in different expense category.
The gross replacement rate is defined as gross pension entitlement divided by gross pre-retirement earnings. The net replacement rate is defined as the individual net pension entitlement divided by net pre-retirement earnings, taking into account personal income taxes and social security contributions paid by workers and pensioners. These indicators are measured in percentage of pre-retirement earnings by gender.
A similar deficit was recorded in 2015 in the RPPS, where the number of beneficiaries is substantially lower, as contribution rates are extremely low.
The federal health fund contributes to state and municipal funds which are also finances by subnational revenues (Couttolenc and Dmytraczenko, 2013).
A recent proposal to increase the share to 14.8 percent in 2017, followed by increases to 15.5, 16.2, 16.9, 17.6, 18.3, and 19.4 percent in 2023, is under discussion in the Senate.
Out of pocket expenditure is any direct outlay by households, including gratuities and in-kind payments, to health practitioners and suppliers of pharmaceuticals, therapeutic appliances, and other goods and services whose primary intent is to contribute to the restoration or enhancement of the health status of individuals or population groups. Private health expenditure includes direct household (out-of-pocket) spending, private insurance, charitable donations, and direct service payments by private corporations.
According to surveys, Brazilians rely on private provision for dental services.
Other non-communicable diseases, such as cardiovascular diseases, hypertension, obesity, and neuropsychiatric disorders account for the overwhelming majority of causes of death and their trend is worrisome. (Victoria et al., 2011 and Schmidt et al, 2011).
Based on demographic projections by UN (2015 Revision of the UN World Population Prospects). The assumptions behind the projections of fertility and mortality rates, and migration are described in Clements et al (2015). In Figures 4 and 5, “more developed economies” are Australia, Canada, European countries Japan, New Zealand, and the United States, while “less developed countries” include the rest of the world.
The Brazilian statistical institute (IBGE) projects that old-age dependency will reach 36 percent by 2050 from 11 percent today. The population of retirees is growing at about 3.6 percent a year. Given the rule for updating the minimum wage and its link to pension benefits, most retirees’ benefits grow about as fast as nominal GDP; thus, the nominal growth in contribution revenue is barely enough to pay for the annual rise in the benefits of existing pensioners: little money is left over to finance the increase in the number of retirees.
The demographic estimation uses baseline population projections by the UN under the “medium variant” scenario which employs probabilistic models to extract projectors of fertility and mortality rates for individual countries. Beyond 2065, pensions are projected to grow in line with demographic developments.
Second order interactions are not taken into account in the model.
ILO; based on Pesquisa Mensal de Emprego.
Under the proposed constitutional amendment, capping nominal expenditures to GDP over the next 20 years, the objective is even tougher as it implies that federal social security spending must fit under the cap.
There is a 6.5 percentage point increase in spending increase on pensions between 2015 and 2030 (from 12.2 to 18.7 percent of GDP). An across the board reduction in benefits of 35 percent (6.5/18.7), would bring spending down to 12.2 percent of GDP in 2030. To achieve the same result, retirement age would have to be increased by about 6 years: we estimate that in 2013, about 28 percent of the population age 60+ is aged 60–64. This means that an increase in the retirement age by 5 years would cut beneficiaries by about 28 percent. To achieve a 35 percent cut, pensionable age would have to increase by 5.7 instead of by 5 years. The third option is increasing revenue from contributions. We assume that in Brazil it is possible to raise about 0.4 percent of GDP per each contribution point (this is based on the wage-to-GDP ratio and might be optimistic). To achieve 6.5 percent of GDP in savings, it would be necessary to raise pension contributions by 16.2 (6.5/0.4) percentage points.