Home Administration Bolsonaro’s Pension Reform Plan Predicts Higher Civil Servant Discount Rate

Bolsonaro’s Pension Reform Plan Predicts Higher Civil Servant Discount Rate

The “light” version of the reform, which does not amend the Constitution, is based on two bills already drafted, drafted by Congressional consultants

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In an articulation with parliamentarians and allied governors, President-elect Jair Bolsonaro has stepped in to advance this year with the Social Security reform, analyzing a set of changes that can be made without changing the Constitution. The light version of the reform is based on two bills already drafted, drafted by Congressional consultants. They allow for the creation of a supplementary social security tax rate for civil servants, the formula 85/95, and changes in the rules for calculating pensions, among other things.

One of the projects allows for the creation of a supplementary social security tax rate of up to 22 percent for federal public servants. This proposal is considered fundamental by the governors-elect since the states use the federal rules as a reference. They are already going to start government with the empty coffers and need an urgent solution at the risk of a systemic financial crisis in the state administrations.

Some states have already raised their social security rates, but there is an action in the Supreme Court (STF) that questions whether they may or may not exceed 14 percent. The lawsuit was motivated because the State of Goias raised its rate to 14.25 percent. The merits have not yet been tried by the court, but there is the great expectation from the governors for a ruling.

Proposal of the Congressional technicians ends rule 85/95, which allows workers to more easily achieve full benefit at the time of retirement. Calculation rule would be the one drawn up by the pension reform reporter, Mr. Arthur Oliveira Maia, who starts at 60 percent of the contribution salary and grows the longer the contribution time.

Another point that can be changed in this package is the pension rule, which starts at 50 percent of the benefit amount and adds another 10 percent for each dependent. There is a limit to the accumulation of pensions and pensions at three minimum wages or 50 percent of the lowest benefit, and it is up to the insured to choose the option that is most advantageous.

According to the report, the technicians responsible for the proposal were sought by members of the transition team to discuss the possibility of using the texts. The talks should continue over the next week. The strategy agreed by parliamentarians was to keep secrecy until next week, but Bolsonaro himself preempted and leaked the news last Wednesday. Then it was the governor-elect of Rio, Wilson Witzel, who anticipated and talked about Bolsonaro’s plans to study this path.

One transition member said the group is looking at all alternatives.

Parliamentarians have warned the president-elect that the shorter proposal for Social Security changes has a greater chance of being approved by the end of this year. The advantage of adopting this path would be the fact that bills require a smaller number of parliamentarians supporting them to be approved in the National Congress. A PEC depends on the yes of 308 deputies and 49 senators, a number of votes more difficult to be won. Without amending the Constitution, however, it is not possible to establish a minimum age for retirement.

The projects currently being analyzed were built at a time when Temer‘s proposal did not avenge. At the time, the military handed over their own proposals to the president, with career restructuring and compensation.