The social security reform in Brazil: simulations with a dynamic CGE model

Abstract

This paper examine the impact of demographic transition on financial stability of Regime Geral de Previdência Social (RGPS) in the coming decades and evaluate the effects of three parametric reform scenarios, among them, the introduction of a minimum age similar to that introduced by the pension reform, Emenda Constitucional no 103, approved in 2019. The analysis is based on a Dynamic Computable General Equilibrium model integrated with a social security module. The results show that the introduction of a minimum age is insufficient for stabilize the deficit of RGPS, reinforcing the need to combine this measure with other devices that reduce the average benefit values. Among the reform scenarios evaluated, the one that produces the highest cost to society is the increase in social security contribution rates.