By Gustavo Stenzel, Executive Vice President, Director of Latin America Strategy, Franklin Templeton Emerging Markets Equity; Marcos Mundim, Senior Executive Director, Franklin Templeton Emerging Markets Equity
Brazil's lower house of Congress overwhelmingly approved a landmark pension reform bill this month, a positive step in a process that should substantially shore up the country's fiscal situation. While it still needs a full congressional vote, we think this is a positive development from an investor standpoint.
Brazil's official pension fund system is a mandatory, pay-as-you-go system. As the population grows older, the cost of these pensions is