Abstract

The aim of this study is to analyze the impacts of population aging on pay-as-you-go pension schemes in three countries: Brazil, Spain and France. Benefits and contributions are calculated based on current rules and population projections by sex and age group, up until 2100. From 2016 to 2100, the number of old-age benefits in the three countries is expected to increase by 235%, 54% and 73%. By 2050, ceteris paribus, the Brazilian deficit will amount to USD 188 billion, reaching USD 260 billion in 2100. For France and Spain figures will be USD 134 billion and USD 92 billion. In 2100, the Spanish per capita deficit will be the highest: USD 7,200, against USD 5,400 (France) and USD 3300 (Brazil). Two additional exercises are included. The first is the calculation of the Necessary Contribution Rate. By 2016 Brazil’s rate should already be at 40%. For the other countries, the rates should be 23% (France) and 32% (Spain). In 2050, unless some action is taken, the Brazilian rate will surpass an absurd 100%, and by 2100, an unreal 160%. The second exercise was the calculation of the Average Balance Benefit. For Spain, there would be a reduction of USD 884 per month to USD 372 by 2050. For Brazil, the current balance benefit of USD 248 would be reduced, by 2050, to USD 98. Reduction in Brazil (60%) is almost the same as in Spain (58%). The results provide evidence of the need for pension reforms due to aging.

Key words
Aging; Pension system; Pay-as-you-go pension system