Just released data for Brazil indicates that life expectancy increased, but as a consequence pensions will decrease

The survey IBPG, just released last Monday, shows that the life expectancy in Brazil increased three months and 14 days from 2006 to 2007. Today the life expectancy at birth equals 72.57 years. While this change reflects improvements in the life and health of Brazilians it will have adverse effects on the pensions.

The information from the survey is used to calculate the “mortality table 2007” which in turn is used to apply a factor called “fator previdenciário” to calculate age and time of contributions adjusted pensions. This means that if a pensioner does not want to have their pension changed, he/she has to contribute for more time or to retire latter. According to the Ministerio da Previdencia Social a worker 63 years old and with 35 years of contributions needs to work 54 more days in order to keep the benefits unchanged.

The “fator previdenciário” introduced in 1999, and today under discussion in the Congress, aims to give incentive to people to work more and retire later in life, and at the same time achieve long term financial viability. It has had relative success since it has increased the retirement age in one or two years but not the years needed to reach 60 years as expected. In 2007, the average retirement age based on time of contributions is 54.4 for men and 53.33 for women.