BRASILIA: Brazil expects to save more than $300 billion over 10 years through a bill presented to Congress on Wednesday that aims to overhaul the country’s unsustainable pension system, the government said.
The text, which requires constitutional changes to impose a minimum retirement age and extended pay-in periods for workers in both the public and private sectors, is a crucial plank of right-wing President Jair Bolsonaro’s plan to overhaul Latin America’s biggest economy.
Bolsonaro personally delivered the much-anticipated text to Congress, where he was jeered and booed by leftist deputies in the opposition.
He was to address the nation on the issue later on Wednesday, after earlier this week warning that spending on pensions would break Brazil’s finances within four years if changes were not adopted.
Injecting pro-business vigour and removing sclerotic regulations were principal election pledges that propelled Bolsonaro into the presidency. He took office seven weeks ago.
“We need to change the rules of the pension system. People are living longer and women have fewer children, which means that the working population will decrease,” Leonardo Rolim, the official responsible for pensions at the Economy Ministry, told a news conference.
Brazil is currently one of the few countries without a minimum retirement age. Instead, workers can retire after contributing to the pension system for at least 35 years in the case of men, or 30 for women.
Under the proposed reform, the minimum retirement age would be set at 65 for men and 62 for women. Full pensions would be paid after 40 years of contributions, with access to partial pensions from 20 years of payments.
The architect of the changes is Bolsonaro’s economy minister, Paulo Guedes, a US-trained free-marketeer. He had reportedly initially sought 65 as the minimum age for both sexes before Bolsonaro decided on a lower limit for women.
He and the government are concerned by Brazil’s ageing population and the drain that represents under current pension spending. Official figures show that in 2018, some nine per cent of Brazilians were over age 65 — and that by 2060, that would jump to 26 per cent of the population.
“One of Brazil’s problems... is that there are people retiring at just over 50, and even younger in some categories such as police officers and teachers,” observed Marcel Balassiano, an analyst at the Getulio Vargas Foundation.
The prospect of changes for those currently nearing retirement has prompted many Brazilians to look at doing so early.
That was the case of Silvia Oliveira, a 50-year-old secretary in Rio de Janeiro.
“I have paid in for 30 years, but I haven’t reached the minimum age that the government wants. That’s why I’m seeing if I can retire now, because I’m worried I might be made to work 12 more years,” she said.
Public spending on pensions accounted for 13.6 per cent of GDP in 2017. If that trajectory is not altered, it could rise to 23 per cent in 2060.
The government’s fiscal room for manoeuvre has been crimped by a record-breaking 2014-2015 recession and subsequent tepid growth. The deficit in the pension system ballooned from 2.1 percent in 2011 to 4.3 percent in 2018. — AFP
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