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The Spread of Benefits Alleviating Poverty in Brazil
Helmut Schwarzer and Guilherme Delgado
In the 1970s unconventional measures to expand coverage were introduced in Brazil. The most notable of these was the creation of a non-contributory rural scheme (1971) followed by social assistance pensions (1974), all providing flat-rate benefits. The new constitution in 1988 improved the coverage and generosity of these schemes. As traditional urban contributory pensions introduced in the 1920s reached maturity, non-contributory schemes became responsible for extended coverage and the breaking of the barriers of informal labor and poverty, which are common in developing countries. By December 2001 the Brazilian Social Security Institution INSS paid out 20 million benefits, 6.3 million of these in the rural scheme and 2.1 million in assistance pensions.
The rural scheme provides benefits covering old age, disability, sickness/maternity, labor-related accidents and for widows or orphans of rural workers. Old age pensions are granted at age 60 for men and age 55 for women, five years below the retirement ages of urban dwellers. The insured are not required to meet contribution requirements, but to document previous periods of rural work. Benefits are equal to one minimum wage (US $87 in April 2002).
The scheme is financed partly through a contribution of 2.2% of the value of the agricultural product sales. However, this revenue barely covers one-tenth of the total cost of rural benefits. Thus the deficit requires annual transfers from the urban workers scheme and the Treasury of about 1% of the GDP.
Yet such a deficit is justified by the enormously positive socio-economic impact of the program. Recent research by IPEA showed that the rural pensions
The main lessons to be learned are:
IPEA/Instituto de Pesquisa Economica Aplicada, SBS/Ed. BNDES 14th Floor, 70.076-900 Brasilia-DF-Brazil.
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