The Brazilian Pension System from an innovative perspective

Abstract

The demographic changes and the growth in expenses of the social security make the current pension system in Brazil unsustainable, creating opportunities for the complementary fund industry. This work discusses the current and future state of the Brazilian Pension Fund System and points out the opportunities for the private pension fund industry. Additionally, this paper proposes an innovative model for the new generation of retirement products based on the Goal-Based Approach, adapted to the Brazilian market. This paper is the result of intense research based on the most significant bibliography in this area, as well as interviews with pension funds experts from the private, academic and public sectors. The thesis demonstrates that the creation of the complementary fund for federal employers was a significant initiative, but it is far from solving the pension system deficit problem. Additionally, the paper criticizes the high market share concentration among only six players, which creates an "oligopoly" extremely harmful for investors, who are offered old-fashioned products at exorbitant fees. It also presents an adaptation of the Goal-Based Approach that is expected to become the new standard for the next generation retirement products. Finally, apart from the political changes that should be pursued to guarantee the stability and future of the national budget, competition must increase. Innovative products and distribution channels proposed in this thesis will better serve customers, who will be offered tailor-made and integrated solutions at reasonable costs.