Non-contributory pensions in Brazil: The impact on poverty reduction

Despite labour market informality, Brazil has reached a remarkable benefit coverage among the elderly over the last decades. This coverage extension is, to a large extent, due to two basic pension programmes financed by tax revenues and some social security contributions. The rural scheme, with nearly seven million beneficiaries, comprises old-age, widow and invalidity pensions, as well as maternity and labour accident benefits, all equivalent to the official minimum wage level. People are entitled to their benefits, if they belong to the rural family economy and if they can document length-of-service in agriculture, fisheries, or similar activity instead of length of contribution, thus breaking away from the Bismarckian contributive link. The financing of this programme is structurally dependent from either Treasury or an urban-rural cross-subsidisation. A second programme includes by 2.1 million people entitled to social assistance pensions, targeted at the indigent aged 67 or more and the disabled. On the basis of the 1999 PNAD Household Survey, the paper draws up a profile of the aged poor in Brazil, and finds that the impact of both programmes on poverty alleviation is large. Other positive effects, based on their research, are also reviewed. Finally, the study examines some key policy questions, such as the steps required to safeguard the rural programme’s mid-term legal and financial continuity, targeting aspects, further legal improvements, and the differentiation between social insurance and social assistance.