ESSEC working Group on risk

L'Institut des actuaires s'associe au Working Group on Risk de l'ESSEC-CREAR pour sa prochaine conférence sur le thème : "A public micro pension programme in Brazil: Heterogeneity among states and setting up of benefit age adjustment" 

par Renata G. Alcoforado, ISEG & CEMAPRE, Universidade de Lisboa (Portugal), Federal University of Pernambuco (Brazil)

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Abstract : Brazil is the 5-th largest country in the world, despite having a “High Human Development” it is the 9-th most unequal country. The existing Brazilian micro pension programme is one of the safety nets for poor people. To become eligible for this benefit, each person must have an income that is less than a quarter of the Brazilian minimum monthly wage and be either over 65 years old or considered disabled. That minimum income corresponds to approximately US $2  per day. This paper analyses quantitatively some aspects of this programme in the Brazilian Public Pension System. We look for the impact of some particular economic variables on the number of people receiving the benefit, and seek if that impact significantly differs among the 27 Brazilian Federal Units (UF). We search for heterogeneity. We perform regression and spatial cluster analysis searching for detection of geographical grouping. We use a database that includes the entire population that receives the benefit. Afterwards, we calculate the amount that the system spends with the beneficiaries, estimate values per capita and the weight of each UF, searching for heterogeneity reflected on the amount spent per capita. In this latter calculation we use a more comprehensive database, by individual, that includes all people that started receiving a benefit under the programme in the period from the 2nd of January 2018 to the 6th of April 2018. We compute the expected discounted benefit and confirm a high heterogeneity among UF's as well as gender. We propose achieving a more equitable system by introducing ‘age adjusting factors’ to change the benefit age. This is a joint work with Alfredo D. Egidio dos Reis.

Renata Gomes Alcoforado is, since 2015, assistant professor in the Department of Accounting and Actuarial Sciences at the Federal University of Pernambuco (Brazil). Her research interest focus on Risk and Ruin Theory, in particular in setting up benefit age adjustments on public pensions, considering heterogeneity among states and gender. She is going to submit soon her Doctorate thesis on Applied Mathematics to Economics and Management at ISEG - Universidade de Lisboa (Portugal), developed
under the supervision of Alfredo D. Egídio dos Reis. Renata is also a member of the Portuguese Actuaries Institute.