The pension reform, implemented in Brazil in 2019, brought a series of significant changes to the country's economy and, consequently, to the banking sector. This happens because changes in retirement and pension rules directly affect the financial system, generating impacts ranging from the supply of credit to the profitability of banks.
To better understand the impacts of pension reform on the banking sector, it is important to first understand what changed with the reform. The most significant changes were the increase in the minimum age for retirement, the change in the calculation of the benefit amount and the institution of a capitalization system.
Increase in the minimum age for retirement
With the reform, the minimum retirement age is now 65 for men and 62 for women. This means that people will have to work longer before they retire, which has a direct impact on the banking sector.
With people working longer, the demand for credit tends to increase, as workers will have more time to purchase goods and services. In addition, the extension of working life can also lead to an increase in savings, which is beneficial for banks, who can lend this money and generate more profits.
Change in the calculation of the benefit amount
The pension reform also changed the way the benefit amount is calculated. Before, the retirement amount was calculated based on the 80% highest wages that the person received throughout life. Now, the calculation is based on 100% of wages, which tends to reduce the amount of the benefit.
This change also has impacts on the banking sector. With lower benefits, demand for credit is likely to increase as people will have less money to spend. Also, with smaller benefits, people can choose to save more, which is also beneficial for banks.
Capitalization system
The pension reform also instituted a capitalization system, in which each worker makes his own savings for retirement. This system can be beneficial for banks as they can manage these savings and generate profits from it.
On the other hand, the capitalization system can also generate risks for banks. If people fail to save enough for retirement, they may end up relying on credit in the future, which can increase their risk of default.
In conclusion, the Social Security reform brought a series of impacts to the banking sector, from the increased demand for credit to the possibility of generating more profits with the management of savings. However, it also brought risks, such as an increase in defaults. Therefore, banks need to adapt to this new reality and seek strategies to minimize risks and maximize benefits.
