Luís Eduardo Afonso — Foto: Leo Pinheiro/Valor
The Brazilian government expects mandatory spending on social security benefits to rise 7.7% in 2027, based on estimates to be included in the annual budget bill that the economic team will submit to Congress on Aug. 31.
Data obtained by Valor show total spending increasing to R$1.22 trillion next year from R$1.13 trillion projected for 2026 in the latest Bimonthly Revenue and Expenditure Assessment Report.
The total includes social security benefit payments, Comprev — the compensation system between the National Social Security Institute (INSS) and public-sector pension systems — and benefits awarded through court rulings. Excluding Comprev and court-ordered payments, spending on social security benefits alone is expected to rise 8.6%.
The figures, calculated on a budget basis, were finalized by the Ministry of Social Security and the INSS early this month and approved by the National Social Security Council. They were then sent to the Ministry of Planning and Budget for inclusion in the 2027 budget bill.
The main drivers of the increase remain the minimum wage, which is adjusted above inflation and serves as the benchmark for benefits paid at the statutory floor, and growth in the number of beneficiaries. Benefits tied to the minimum wage account for more than half of total social security spending.
At the same time, more Brazilians become eligible each year for retirement or other social security benefits.
The forecast reinforces a long-term trend of rising spending under the General Social Security System (RGPS), which covers private-sector workers and is administered by the INSS. Economists warn that expenditure growth is likely to accelerate further over coming years and decades as the number of beneficiaries increases and the pool of contributors shrinks.
“Spending is growing 3 to 4 percentage points faster than the country’s gross domestic product. It rose 10.2% between 2025 and 2026, and now it is set to increase 7.7% from 2026 to 2027. Those are two years of growth well above our economic growth rate, even considering that these are nominal figures,” said Luís Eduardo Afonso, a professor at the University of São Paulo’s School of Economics and Business Administration and a social security specialist.
“The debate in Brazil has focused heavily on the trajectory of the fiscal deficit and public debt, and that problem has one main cause: social security. Unless we reopen the social security debate, possibly taking tough measures, the fiscal issue will never be resolved,” Afonso added.
Leonardo Rolim, a former social security secretary and former president of the INSS, warned that social security spending is likely to grow faster than the limits set by Brazil’s fiscal framework in the coming years unless measures are taken to curb the trend.
“It is an indisputable fact that the country is aging rapidly, with a growing number of retirees, and over the next decade we will see a decline in the working-age population that contributes to the social security system,” Rolim said.
He cited data from the Brazilian Institute of Geography and Statistics (IBGE) showing that the elderly population has more than doubled over the past 25 years, while the number of potential social security contributors has increased by only 30%.
“By 2070, we will have six times as many elderly people as we had in 2000 and roughly the same number of working-age people, based on IBGE data,” Rolim said.
Economist Rogério Nagamine, also a social security specialist, estimates that spending on benefits alone, excluding Comprev and court-ordered payments, will double in nominal terms over the nine years from 2018 to 2027. That increase will occur despite the 2019 social security reform, meaning the trajectory would have been even worse without it.
“The 2027 projection is twice the RGPS spending seen in 2018, in nominal terms. In other words, RGPS spending doubled in nine years. From 2022 to 2025, RGPS expenditure grew at an annual rate of 4% in real terms, which is clearly unsustainable over the medium and long term,” Nagamine said.
Excluding Comprev and court rulings, spending on social security benefits is projected to rise 8.6% in 2027 from this year, to R$1.16 trillion from R$1.07 trillion. The figures are nominal.
For Comprev, the government expects little change, with projected spending slipping 0.2% to R$7.88 billion from R$7.89 billion. A law approved in 2025 placed Comprev under cash-flow controls, meaning the government may spend only the amount authorized in the annual budget law.
Spending on social security benefits awarded through court rulings, meanwhile, is expected to fall 8.1%, to R$49.4 billion in 2027 from an estimated R$53.7 billion this year. The government has less control over this portion of social security spending because it depends on judicial decisions. The projected decline reflects a smaller stock of precatórios, or court-ordered government debts, due for payment next year.
Nagamine said the 2027 projections appear reasonable, although an inflation surprise or a higher rate of benefit approvals could change the picture.
“The effort to reduce the backlog creates some uncertainty about the trajectory of RGPS spending [in 2027],” he said.
The INSS backlog, which reached 3.2 million applications in February, has been shrinking rapidly, although much of the decline reflects an increase in rejected claims. That could put upward pressure on 2027 spending if applicants appeal those decisions through administrative or judicial channels and ultimately secure benefits.
Rolim, however, said the estimates for both social security benefits and court-ordered payments may be too low.
“RGPS precatórios will fall to R$18.5 billion in 2027 from R$21 billion in 2026, a reduction of R$2.5 billion. That is excellent news, but it does not justify a R$4.3 billion decline in RGPS judicial expenses. There would also need to be a R$1.8 billion reduction in small-value payment orders [RPVs], which does not seem feasible,” he said.
RPVs are court-ordered government payments involving smaller amounts and are also included in the projection for judicial awards under the social security benefits line in the 2027 budget bill.
