Survivor’s pension A NDC model applied to survivor’s pension of the Brazilian Armed Forces

Abstract

This paper aims to investigate the impact on the actuarial result of the survivor’s pension system in the Brazilian Armed Forces, as well as on the benefit itself, resulting from the modification of its costing plan with the use of the NDC system. To achieve this, a simulation was conducted using the R software, based on a model of notional accounts, and utilizing data from 3,942 military personnel who joined the Armed Forces in 2020. From both the perspective of public spending and the amount received by the beneficiary, the results indicate a significant reduction, mitigating the deficit in the Social Protection System of the Armed Forces at the expense of the degradation of the survivor’s pensions to be granted. In addition to the uncertainty about the replacement rate, depending on the variation in the parameters adopted for calculating the benefit, the pure NDC system would create differences that currently do not exist, such as the existence of distinct and greater benefits for men, and pensions of different values left by military personnel with identical careers. The originality of the article encompasses the theme “notional accounts” applied to the Brazilian Armed Forces, the perspective to be developed, with application to the survivor’s pension benefit, since, as a rule, the focus is on the old-age pension, and empirical research on a social protection system little explored in the literature.

Keywords: NDC System; Survivor’s Pension; Armed Forces; Social Protection; Military Survivor’s Pension.