SeLFIES Can Help Brazil Create a SUPER Supplementary Pension
Revista Brasileira de Previdência, 11ª edição – Primeiro Semestre I-2020
8 Pages Posted: 13 May 2020
Date Written: April 18, 2020
Brazilian policy makers and researchers have discussed the introduction of a complementary pension system to complement the Regime Geral de Previdência Social (RGPS), specially for those that want a retirement income above the RGPS ceiling. This article first recommends that the complementary system must be SUPER (Simple, Universal, Portable, Efficient with low cost and Robust Regulatation). It then proposes the adoption of a financial innovation called SeLFIES (Standard-of-Living, Forward-starting, Income-only Securities), as the default investment option for a modern capitalization regime. Brazil presents an interesting opportunity to be the first country to adopt and implement SeLFIES given the initial conditions, especially the innovations introduced in the market for government bonds. This financial innovation would help the Brazilian government address two challenges simultaneously: improve retirement security (by including even the most financially illiterate people and those in the informal sector in retirement plans) and boost infrastructure financing.
Keywords: Supplementary Pensions, SeLFIES, Social Security, Brazil, Financial Innovation, Pension Design
JEL Classification: G50, G51, G52, G53
Suggested Citation: Suggested Citation