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Imbalance, inequality, equity, and adjustment in pay-as-you-go pension systems in developing countries: empirical modeling and projections with data from Brazil

Published online by Cambridge University Press:  15 July 2025

Ajax Moreira ,
Miguel Foguel Open the ORCID record for Miguel Foguel [Opens in a new window]  and
Sergio Ferreira
Ajax Moreira
Affiliation:
Instituto de Pesquisa Econômica Aplicada (IPEA), Rio de Janeiro, Brazil
Miguel Foguel*
Affiliation:
Instituto de Pesquisa Econômica Aplicada (IPEA), Rio de Janeiro, Brazil
Sergio Ferreira
Affiliation:
Instituto Mobilidade e Desenvolvimento Social (IMDS), Rio de Janeiro, Brazil
*
Corresponding author : Miguel Foguel; Email: miguel.foguel@ipea.gov.br
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Abstract

We analyze the effects of different pay-as-you-go public pension systems on financial imbalance, rate of return, and inequality of heterogeneous generations in terms of gender and education. We include aspects that are relevant for developing countries such as labor informality and payment of an old-age and social benefit. We introduce a new mixed system that combines components of the defined benefit (DB) and the defined contribution (DC) systems. Results show the new mixed system represents a compromise between the DB and DC systems and that a scheme (inspired in the German system) exhibits the highest rates of return and horizontal equity.

Keywords

financial imbalanceheterogeneous agentsinequalitypublic pension systemssimulationsC53D63H55H62J11

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Type
Article
Information
Journal of Pension Economics & Finance , First View , pp. 1 - 32
Copyright
© The Author(s), 2025. Published by Cambridge University Press.

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