Resumen de From the brazilian pay-as-you-go pension system to capitalization: Bailing out the government

José L. Carvalho, Clovis De Faro

• Given that the current official pension plan in Brazil is not feasible, several reform proposals have been recently submited. In a previous work, we have developed a scheme which has its fundamentals based on a market approach. A recurrent criticism to this proposal is centered on the fact that we estimated the present value of the transition costs without considering the flow of funds necessary for the government to implement it. The purpose of this paper is to estimate this flow of funds, taking into account the fact that the government will mantain all the benefit payments associated with the present system. Subsidiarity, we will also suggest a scheme for the government financing of such a flow of funds.