Abstract
ABSTRACT This paper aimed to apply (dynamic and static) actuarial models to calculate the balanced contribution rates for the planned (at the minimum age) retirement benefit of the General Social Security System, based on the original and substitutive texts of the reform proposed by Michel Temer’s government. Even with the regular increases in life expectancy and the long-term nature of the analyses, national studies on social security are typically based on the static mortality hypothesis. The relevance of this study is evident due to the demographic changes, particularly the increase in life expectancy, experienced by the Brazilian population in recent decades and which put in question the sustainability of the national pension system. The use of dynamic actuarial models allows for more accurate discussions about the future of social security, besides contributing to the still scarce national literature. Static and dynamic actuarial models were applied to a representative individual, adjusting mortality tables from the United Nations covering 1950 to 2100. It was verified that the actuarially fair rates calculated by the dynamic actuarial model are typically higher than those obtained by the static model, especially for women. This difference is expected to increase as gains in life expectancy become more influenced by the reduction in mortality at more advanced ages. Moreover, if the social security reform is approved (in accordance with either the original or the substitutive text), there are indications from the dynamic model that the contributions rates currently charged would be excessive for men. In turn, these rates would be excessive for women considering the original text, and closer to the actuarially fair value considering the substitutive text. The development, disclosure, and regular updating of official dynamic tables (whether for mortality or other biometric assumptions) are also recommended.
Highlights
With a clear fiscal motivation that involves reducing public spending on pensions (Afonso, 2018), in December of 2016, Proposed Constitutional Amendment n. 287-A of 2016 was launched
One of the main arguments in favor of the reform is linked to the demographic changes that have occurred in the country in recent decades, in particular with the reduction in birthrates and regular increases in life expectancy, seriously affecting the system’s sustainability (Lima & Matias-Pereira, 2014)
Despite seeking to discuss peculiarities of the reform, such as the mortality heterogeneity of the Brazilian population (Souza, 2018), balanced contribution rates based on applying multidecremental models (Gouveia, Souza & Rêgo, 2018), the comparison of social security indicators (Afonso & Zylberstajn, 2017), and specific discussions about the RPPS (Dias, 2018), these studies present the methodological limitation of using period mortality tables, which only consider the mortality observed in a given time period (Ortega, 1982) in their analyses, even when faced with scenarios of increasing life expectancy
Summary
With a clear fiscal motivation that involves reducing public spending on pensions (Afonso, 2018), in December of 2016, Proposed Constitutional Amendment n. 287-A of 2016 (or PEC n. 287-A, as abbreviated in Portuguese) was launched. Despite seeking to discuss peculiarities of the reform, such as the mortality heterogeneity of the Brazilian population (Souza, 2018), balanced contribution rates based on applying multidecremental models (Gouveia, Souza & Rêgo, 2018), the comparison of social security indicators (Afonso & Zylberstajn, 2017), and specific discussions about the RPPS (Dias, 2018), these studies present the methodological limitation of using period mortality tables, which only consider the mortality observed in a given time period (Ortega, 1982) in their analyses, even when faced with scenarios of increasing life expectancy. Research based on period tables ignores the dynamic behavior of mortality
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