Brazil's federal government has lowered its spending forecast for the national social security system, known as Previdência Social, by 5 billion reais (about $1 billion) for 2027. According to Brazilian outlet G1, pension and benefit payments are now expected to total 1.218 trillion reais next year, based on a projection presented Tuesday to the National Social Security Council (CNPS). The previous estimate, released in August, had put the figure at 1.223 trillion reais.

Even with the reduction, the 2027 forecast still represents a 7.92% increase over the 1.129 trillion reais projected for 2026. The revised figure was approved unanimously by the CNPS.

Per G1, the revision followed the government's move to factor in the growing number of benefits being approved and progress in clearing a backlog of pending applications at the National Social Security Institute (INSS), Brazil's equivalent of a social security administration. Data from the Ministry of Social Security show the backlog fell to 1.8 million pending benefit requests in June and to 1.55 million by the end of July, the lowest level in 21 months. Over the course of the year, the backlog has shrunk by 74%.

Fewer delays, more payouts

Clearing the backlog faster has a direct fiscal effect: the quicker INSS processes and approves claims, the more the government ends up paying out. That is why, despite the overall cut in the total forecast, most of the money projected for 2027 will still go toward paying pensions and other retirement benefits. For that category alone, the forecast stands at 1.161 trillion reais, an 8.76% increase over the 2026 projection.

The fiscal room opened up by the 5 billion real cut can now be used by the government as it drafts the 2027 annual budget bill, which by law must be sent to Congress by August 31, G1 reported.