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here was good news from Brazil this week when a draft emerged of the government’s plans to overhaul the country’s deficit-ridden pensions system. The reform, under new president Jair Bolsonaro, would be a big step in setting the country back on the path to growth after its crushing recession of 2015-2016, raising hopes of investors who have seen several attempts to get the changes through congress fail over the past quarter of a century. Former president Fernando Henrique Cardoso (1995-2002) became the standard-bearer of liberal market reform in Latin America even before he took office, with the inflation-busting Plano Real measures of 1994, enacted while he was finance minister. As president, he put pensions reform front and centre of his policy agenda. To the astonishment of many, so did the former leftwing firebrand Luiz Inácio Lula da Silva (2003-2010) who, having blocked the government’s assault on “acquired rights” while in opposition, quickly understood the fiscal imperative to act once in office. Indeed, both presidents succeeded in passing partial reforms: Mr Cardoso after years of struggle in 1998, Mr Lula da Silva as one of his first acts in 2003. Both faced fierce resistance among the population and from vested interests in Brasília. Neither did the job properly and Brazil’s public finances continued on their unsustainable course. Reform then took a step backwards under Dilma Rousseff (2011-2016), Lula’s chosen successor, but was back on the agenda under Michel Temer (2016-2018). His caretaker government, installed after Ms Rousseff’s impeachment, quickly pushed through two important fiscal reforms (curtailing subsidised lending and putting a cap on public spending) but failed, again, at pensions. The predictable spectacle of elected politicians putting their interests — and those of their cronies — ahead of the country has been peppered with farce. A central plank of Mr Cardoso’s reform was defeated by one vote when a senator accidentally pressed the wrong button. Mr Temer’s plan was kiboshed within days of its expected success when recordings became public that implicated him in corruption. He denied the allegations and survived, but the plan was dead. However, despite a history of failure on pension reforms, this time may be different. Mr Temer’s speechwriters had the idea of shifting the focus of his argument from the fiscal imperative to social justice. This was long overdue. Of public spending on pensions (more than a third of tax revenues), 53 per cent goes to the wealthiest 20 per cent of the population by income and just 2.5 per cent to the poorest 20 per cent. Resentment of pensions reform among voters may have eased. The fiscal pressure has become overwhelming, too. Largesse on pensions has sapped the country’s ability to invest for future growth. Speaking of the need to get the reform done properly, Rodrigo Maia, president of the lower house of congress, told the Folha de S.Paulo newspaper this week: “Everyone [in congress] understands that there will be a definitive rupture in politics if this country doesn’t return to growth.” The pensions system not only saps the ability to spend; it also creates a savings drought. As Alberto Ramos, of Goldman Sachs, put it: “If you are told that when you retire you will get the same income you had in your job, there is no incentive to save at all. Exactly the opposite.” No surprise, then, that Brazil’s savings rate was equal to just 13 per cent of gross domestic product in 2017, far too low for a developing, middle-income economy. Recommended The Big Read Bolsonomics: the reform plans of Brazil’s new president The reform plan leaked this week is the most radical yet proposed. It sets a minimum retirement age of 65 for all — men and women, public and private sector. It requires 40 years of contributions to qualify for a full pension. It creates a mandatory “defined contribution” component. For many in the public sector, looking forward to a cushy retirement in their early 50s, it is a window on to another, much tougher world. Some say the plan was leaked as a trial balloon to gauge the public and political reaction. If so, the reaction was milder than may have been expected. Others say it was leaked by opponents to fire up opposition. If so, that scheme may have fallen flat. Even so, Brazilians and investors should not get ahead of themselves. Mr Ramos says the greatest danger is that reform will once more be diluted, leaving the job to be tackled all over again in a few years’ time. Christopher Garman, of Eurasia Group, said this week that the risk of no reform at all “remained elevated” at an estimated 30 per cent. What is certain is that any plan will come under attack. Hopes of swift progress are almost sure to be dashed. Nevertheless, some kind of reform looks likely to get through at some point this year. For investors having to weigh whether the rally in Brazilian assets has further to run, the shape it will take remains frustratingly unknowable.