The Political Economy of a Brazilian Pension Reform: a Case Study of 2003 Reform.

The Brazilian pension system is a mandatory pay-as-you-go system, with different regimes for private employees (Regime Geral de Previdência Social - RGPS) and civil servants (Regime Próprio de Previdência Social - RPPS). Also, it considers a voluntary private capitalisation (Regime de Previdência Complementar – RPC) for workers who earn over R$ 5,000 (£1,250 approx.) that entered in operation in 2012 for civil servants. In 2003 a pension reform was enacted during the first year of administration of President Lula da Silva. This reform aimed to equalise the rules between public and private workers regimes, by introducing parameters modifications to the RPPS, such as the loss of the principles of integrity and parity of pension amounts. Although civil servants were strong supporters of Lula’s candidacy, this reform faced a fierce opposition from the trade unions of the public sector. In addition, this reform had important political incentives to oppose by a potential electoral damage for the government and legislators. The nature of a pay-as-you-go system and a context of declining ratio among active workers versus retired people involve measures that should tighten rules to turn the system funded and stable on the long-term. However, there is a clash with short-term calculations and perceptions about feasibility of these reforms, politically speaking. This is sharpened by political parties internal organisation and involvedness from organised groups in the Brazilian debate. Nonetheless, the main aims of the reform were achieved, organised groups forced to negotiate a transition period. Then, the new conditions would affect to the new cohorts of civil servants. These results were achieved after a long-term agenda setting and policy making process, mainly pushed by the government, but based on the past reforms conducted by President Cardoso. Also, there was a growing concern about the fiscal issues that were affecting in the medium term the system performance and financial survival. Lastly, the there was not a flux political dialogue, but policymakers took advantage of a weak new Opposition and converged through some of their demands (specially, those proposed in the 1990s by PSDB), losing support from left-wing parties and organisations. This paper deepens the argument of Pribble on the politics of social policies, by distinguish the incentives and constraints generated by the policy architecture, such as the policy legacy on setting issues and the influence from political parties and organised groups. This distinction is also made by dividing the reform process on agenda setting and policy adoption stages. By doing this, I establish political and policy legacy determinants of a reform which advanced towards the fulfilment of the equity dimensions of universalist outcomes. Therefore, the research question that guides this paper is: How did political and institutional actors shape the boundaries and scope of the 2003 Brazilian pension reform towards the partial achievement of universalist outcomes? Regarding methods, I conducted this research through the application of more than 30 semi-structured interviews to Brazilian politicians, experts and former high-level civil servants, mainly, between September and December 2017.