Statutory Old Age Pension Scheme for Public Sector Employees

Mandatory insurance

• Public sector employees employed by public entities at the federal, state, and municipal level, unless stipulated otherwise by the respective public entity (see statutory old age pension scheme for private sector employees).

General finances

• Mainly PAYG-financed from contributions, with transfers from the respective entity of the federation financing the deficits of the system.

Contribution rates

• Varying shares of monthly gross incomes (without contribution assessment ceiling) paid by employee (only deficits covered by public entity).
• Contribution rates determined by income brackets (marginal increase): 7.5% up to BRL 1,045; 9% for BRL 1,045 to BRL 2,089; 12% for BRL 2,089 to BRL 3,134; 14% for BRL 3,134 to BRL 6,101; 14.5% for BRL 6,101 and BRL 10,448; 16.5% for BRL 10,448 and BRL 25,896; 19% for BRL 25,896 and BRL 40,747; 22% for more than BRL 40,747.

• Organised and administered by the respective federative entity.

Qualifying conditions

• Standard old age pension: statutory retirement age is 65 for men and 62 for women; minimum insurance period: 25 years (of which at least 10 years in the public service, and 5 years in the position in which the person will retire).

Early retirement

• Since 2019, no possibility to retire before statutory retirement age (since Constitutional Amendment 103/2019).

Deferred retirement

• Retirement can be deferred to increase pension benefits (general benefit calculation rules: 2% per year); no additional positive adjustments apply.

Combining employment & retirement

• Termination of previous employment relationship with public entity is a precondition for claiming pension benefits.
• When claiming pension benefits, employment in private sector (or in public sector at different public entity) is permitted without a specified earnings limit; persons can increase pension benefits.

Pension benefits

• Primarily based on the amount of contributory earnings throughout working career.
• Maximum amount: BRL 6,101 (in 2020); only applies to persons who entered the scheme in 2004 and after.
• Minimum amount: equal to the minimum wage (BRL 1,045).

Benefit calculation

• Pension benefits of public sector employees (who started working for the federal government in 2004 and after) equal 60% of the mean of all contributory earnings for the minimum insurance period (20 years for men, 15 for women) plus 2% for each additional year of contribution payments (i.e., pension benefits equal 100% of the mean of all contributory earnings for men who contributed for 40 years, and women who contributed for 35 years).
• Pension benefits of public sector employees who started working for the federal government before 2004: pension benefits equal to the last salary before retirement.

Taxation and social security contributions

• Pension benefits are subject to income tax; benefits up to BRL 1,903 are exempt from income tax for retired persons older than age 65.
• Retired persons do not have to pay social security contributions on pensions received of up to BRL 6,101. Pensioners who receive higher pensions must pay a contribution share determined by income brackets.