With the new formula and the increase “on account”, retirements will suffer an additional loss.

Decree 899/2020 granting a 5% increase in pensions and social benefits He doesn’t say it’s because of the one due in March 2021. It is still more fourth increase of the year because it indicates that it corresponds to the award after the three previous corresponding increases “In the first, second and third quarter of the current year.”

Now the official draft that has been sent to Congress brings the news that the quarterly increase of 5% is on account or an advance of the March 2021 increase. Therefore, retirees they would lose to receive the increase of a quarter because 5% is only an advance, to be excluded from the March increase.

Let’s see the sequence. The suspended formula has been applied with a 6 month lag, “Running” behind inflation as happened in 2018 and 2019. So in March of this year, the increase should be granted on the basis of the variables of the third quarter of last year. In June, because of what happened in the fourth quarter of 2019. September, for mobility in the first quarter of 2020 and in December because of what happened in the second quarter of this year.

The increases by decree maintained their quarterly rate but fixed discretionary increases lower than the suspended formula. The 4 increases in 2020 are on top of an increase of 35.3% for minimum pensions and the maximum of 25.3% and, due to the suspended formula, it would have given 42% for all benefits, minimums and maximums . The increases are said to have taken place in March (11.56%), June (10.89%), September (9.88%) and December (4.48%).

Now, when changing the formula from quarterly to half-yearly, in March, the changes in the new variables – formal wages (RIPTE) and collection for ANSeS – must be taken into account for the period July-December 2020, as stated in the bill.

But the project spread with the news that 5% would be absorbed in the next increase. Thus, instead of four, three increases plus one advance will have been granted in 2020.

With these three increases until September, the minimum credit increased by 28.9% and the maximum credit by 18.5%, compared to an annual inflation estimated between 36% and 38%. In this way, all pensions would lose much more – between nearly 9 and almost 20 points – to rising prices.

Moreover, given the current high inflation levels, the shift from quarterly to semi-annual increases adds another detriment to retirees. By spacing out the retirement increases from 3 to 6 months, based on previous calendar semesters, and taking effect 3 months later, the purchasing power of pension assets and other social benefits decreases month after month in the face of inflation, without recovering this loss during the next half-yearly increase. The formula is not a guarantee that increases cannot be less than inflation.

For example, with half-yearly inflation of 15 or 20%, after the increase in March, April and the following months, real assets would decline and in August the retiree would receive up to 17% less than in March. And the September increase would not replace this loss and replicate the losses due to inflation over the next 6 months.

GB