Flush with the restoration of popular rule in 1988, Brazil's new leaders set out to guarantee retirement security by writing lavish benefit formulas into the country's constitution. The fledgling democracy soon found itself facing the kind of entitlement crisis usually reserved for much older nations. In just nine years, population ageing and a spate of early retirements boosted social security spending from less than 8 percent of gross domestic product to more than 12 per cent. Unable to cut benefits, and unwilling to raise taxes, an election-minded Congress responded with massive borrowing. Obviously, this is not going to happen.
Japan also is deeply in debt.
Japan is being buffeted by the same demographic pressures that the US will face after 2010. The percentage of Americans aged 65 and over is projected to rise from 13 percent today to roughly one-fifth in 2030. Japan is greying much more rapidly. The aged already account for 16 percent of its population, and are expected to surpass 21 percent by 2010. Understandably, the economic climate makes many Japanese anxious about their government's ability to make good on its pension promises.