The press always likes a good story involving an old person e.g. "Battling
Granny Fights Off Muggers" or "Pensioner Sets Off on Trip to the
These stories are generally
written by young people who believe that anyone over the age of 40 is practically
physically decrepit and on the verge of senile dementia.
The fact that an older
person can go to the toilet, do his business, wash his hands and come out
without tripping over the rug and breaking a leg is an achievement to these
The Brazilian media is
no different. Over the past year, it has had a great time showing how badly
old people are treated by the lazy, overpaid, heartless bureaucrats who only
exist to make people's lives a misery.
We had the saga of the
pension registration, which led to the sight of pathetic old men and women
aged over 80 queuing for days outside social security offices to prove that
they were still alive and, therefore, entitled to receive their pensions.
We saw similar queues
recently following a bureaucratic mistake, which showed that many pensioners
had been underpaid over the last 10 years and were entitled to a rebate.
Another recent case involved
the refusal of some bus operators to obey a new law allowing people aged over
60, with a monthly income of around 480 reais (US$ 160), to travel free between
Many of the operators
said they could not afford to provide free seats for these people since they
would not be recompensed for the lost income.
In these two latter cases
your correspondent had less sympathy with these poor downtrodden pensioners.
Why, for example, should someone be allowed to travel for nothing between
São Paulo and Bahia (1,219 miles one way) simply because he is 60 years
In most countries a man
of 60 is still regarded as an active part of the workforce and generally does
not retire until he is 65. A number of Brazil's top entrepreneursand
politiciansare still working in their 70s and 80s. Many of the beneficiaries
queuing up for the pension rebate were not that old but in their 50s and early
There are even people
in their 40s who are receiving public pensions. This is thanks to Brazil's
absurdly generous pension scheme under which public employees can retire after
only 20 years' service and receive a pension equivalent to their final pay
packet which is indexed to inflation.
Private sector workers
have no such right and the self-employed have to look after themselves since
the taxes their companies pay go into the common pot and not to the individual
who paid them.
It is this huge pension
bill that has made Brazil one of the most indebted and highly-taxed countries
in the world. A recent supplement in the Gazeta Mercantil newspaper1
reported that the average age of retirement and life expectancy after retirement
in Brazil was 54 and 20.2 years respectively, compared with 63.8 and 15.8
years in other countries.
Life expectancy for Brazilians
after retirement was also an average of four to seven years longer than in
other Latin American countries. To finance the relatively generous benefits
and the longer time of retirement, taxes in Brazil are twice as high as the
Latin American average.
Pensions take up so much
of government spending that the state has little left for other social benefits.
Since there are not enough contributors to fund this long-term generosity,
the government makes subsidies of more than 5 percent of GDP to keep the system
The government's subsidies
amount to almost 25,000 reais (US$ 8,000) a year for former public employees.
The subsidy for other pensioners who get the ordinary state pension is less
than 1,000 reais (US$ 320). Since the government does not have this money
it has to borrow and pay sky high interest rates to do so. That is one of
the reasons why Brazil is in such an economic mess.
The government of President
Luiz Inácio Lula da Silva has taken measures to reform the system by
extending the minimum period of membership and capping the highest pension.
However, the effects of this reform (which was not as radical as it should
have been thanks to the political clout of the public service employees who
include judges and army officers) will not be felt for many years to come.
For the time being the public service pensioners will continue to be cosseted
and retain their privileges.
I know a woman who is
a good example of the wastefulness of this system in financial terms to the
country and in human terms to herself. She is in her mid-50s and has been
retired for about five years. She was a teacher in the public school system
for more than 20 years. She believes she deserves the pension she will receive
until she dies because she worked hard during those years and also raised
a family of three.
Well she would think that
way but the world is full of people who have worked hard for decades, raised
children and ended up with nothing comparable to her pension. If this woman
lives to her mid-80s then she will actually have been a pensioner for a longer
period than she was a worker.
This woman sees nothing
wrong or immoral in receiving a generous pension from the earnings of other
people because, in her view, she worked for the government for more than 20
years and paid her own contributions. When I asked her if she felt that this
system of early retirement was not depriving Brazil of experienced talent
she was not interested.
Like many Brazilian public
service workers she had spent a lot of her working life looking forward to
retiring at an early age and doing nothing. This is a cultural trait which
we have no time to go into here and one which Europeans and Americans find
difficult to accept. (Having said this there are many ex-public employees
receiving pensions who also work and are, in fact, receiving two incomes.)
All of us, of course,
look forward to a well deserved, secure old age but the Brazil's Dorian Grays
can look forward to a not so well deserved, secure young old age.
Poupança e Desenvolvimento" - July 6, 2004
John Fitzpatrick is a Scottish journalist who first visited Brazil in 1987
and has lived in São Paulo since 1995. He writes on politics and
finance and runs his own company, Celtic Comunicaçõeswww.celt.com.brwhich
specializes in editorial and translation services for Brazilian and foreign
clients. You can reach him at firstname.lastname@example.org.