Home State Reform Guedes: Pension Reform Proposal Will Have Capitalization Regime

Guedes: Pension Reform Proposal Will Have Capitalization Regime

In this model, the worker finances a kind of self-savings to guarantee his retirement in the future

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The economy minister, Paulo Guedes, said on Tuesday (8) that the proposed pension reform to be sent to Congress in February will include a funded scheme.

In this model, the worker finances a kind of self-savings to secure his retirement in the future. In the current system, active people’s contributions are used to pay for retiree benefits.

Guedes met on Tuesday with Minister of the Civil Household, Onyx Lorenzoni. At the end of the meeting, both said that the capitalization regime will be in the same text that will bring tougher rules for the current social security system.

“The capitalization system, as we are drawing it, is something much more robust, more difficult, the cost of transition is high, but we are working for future generations,” said the Economy Minister.

In December, Guedes said that it would be necessary to first solve the problems of the current system and then migrate to the capitalization regime.

The two ministers did not give details on the format of the reform nor on the deadline in which the new regime would be implemented. A version of the text should be presented to Bolsonaro next week.

Guedes and Onyx said that the text presented to President Jair Bolsonaro will be profound and will mean that Brazil does not need to discuss further reforms in the next two decades to undo the image that the government will propose a reform of the Social Security.

In the last week, the president has caused badly to be in the economic team while advocating a lighter reform.

Bolsonaro mentioned, for example, that the minimum age for retirement could be 62 years for men and 57 years for women. The text of the government Michel Temer, approved in a special committee in the House, however, establishes 65 years for men and 62 for women.

“We want to democratize savings, accelerate the pace of growth, stimulate productivity growth, generate employment. So it’s a much deeper reform,” said Guedes.

The minister explained that the definition of the minimum age is still under study. He also said that a political assessment will be made on whether or not to use the version of text submitted by Temer.

“We should present a proposal and our goal is that Brazil, over the next 20 years, will no longer have to talk about pension reform,” Onyx said.