Ten keys to pension reform presented by Jair Bolsonaro

The President of Brazil, Jair Bolsonaro, presented at Congress Wednesday reform project of the pension system and pension deficit of the country and which implies substantial changes compared to the current model.

These are the ten key points of the reform proposed by Bolsonaro, in power since January 1st.

1.- Establishment of the minimum age

The text provides for minimum age of 62 for women and 65 for men, with a minimum contribution period of 20 years.

The requirement of a minimum age did not exist in the current system, which allows women to retire with 30 years of contributions and to men of 35 years, so that it It is sometimes possible to benefit from this benefit with about 50 years.

2.- Transition of twelve years with three different options

The proposal includes a period of Transition of 12 yearsas this period progresses, the requirements for retirement will be more rigid.

During these 12 years, the worker will have three options to retire according to different formulas, according to whether he prefers to choose the minimum age or the time of the contribution, or to average between the two factors.

3.- Teachers, Rural Workers, Civilian and Federal Police with Differential Regime

For teachers and rural workers, the minimum age is fixed 60 years, with a minimum contribution of 20 and 30 years, respectively.

As for the civilian and federal police, it is established in the 55 years, with a minimum contribution period of 30 years and 25 years for them.

4.- Forty years of contributions to receive a full benefit

With the minimum contribution of 20 years, the worker would have the right to 60% of the value of the full pension. From there, it will increase by 2% for each year worked.

In this way, to get 100%, it will take 40 years of contribution.

5.- Those who earn the most will contribute the most

Payroll deductions are designed to unify both private and public sector workers. They will also be progressive, that is, those with higher wages will contribute more to the system and those with lower wages will be less successful.

Thus, the percentages will vary from 7.5% for those earning a minimum wage of 998 reais per month (about 270 dollars today) to 16.79% for those who receive more than 39 000 reais (10 500 dollars). ).

6.- The armed forces are excluded from this reform

The military are not in the general regime of citations and enjoy a differentiationthis will not be changed at least by this reform.

However, the Bolsonaro government, which is captain of the army reserve, is committed to developing a text to somehow change the regime of military forces.

7.- Restriction to the accumulation of benefits

The text too provides for a modification of the possibility of adding multiple pensions. With the new reform, the worker will be entitled to the highest value and to part of the other, whose graph will be higher or lower depending on the value of the latter.

8.- Objective: to reduce the budget deficit, but that does not solve it

The government intends to save nearly $ 265 billion in ten years, which should help reduce the budget deficit, which last year was 7.09% of gross domestic product (GDP) and is expected to reach a similar percentage this year.

However, according to several experts, this is only the first step to definitively reverse the deficit. The Bolsonaro economic team also wants to promote a large package of privatizations and concessions aimed at reducing the size of the state.

9.- Long approval procedure

Bolsonaro will need the express support of Congress to approve the reform, since it is an amendment to the Constitution. requires 3/5 votes of deputies and senators and in two shifts.

Before reaching the plenary of the Chamber of Deputies, the text will be badyzed by at least three committees. The government expects that it will be approved by the middle of the year..

10.- It leaves an individual capitalization plan in the future

The new reform paves the way for a system of individual capitalization, similar to that of Chile, in which the retirement of each worker will depend on his ability to save throughout his working life.

New contributors should be able to join this system, which should boost the market for private pension funds.

(With EFE information)