Temer Aims to Iron Out Oversights in Pensioners' Benefits in Welfare Reform

08/16/2016 - 11h53

Michel Temer and his interim government want to limit the number of retirement benefits available to Brazilian citizens at one time. Currently, retirees are able to claim two benefits: a pension and a retirement payment.

Temer is pushing a welfare reform proposal through government channels that he hopes will restrict these benefits. The proposal will shortly been submitted to the Congress for voting.

The proportion of pensioners who also receive retirement pay tripled between 1992 and 2014. In the beginning of the 1990s, 9.9% of people who received the pension also received the retirement payment. Currently, a third of pensioners are in this bracket, and 2.39 million people will go on to accumulate both benefits.

Temer's team has discussed four solutions that could limit this accumulation: to establish a cap on the value of the benefits one person can accrue; to force people to choose between one of the benefits; make one of the benefits fixed, while the other is based on percentages; or to prevent those who already receive retirement pay having access to a pension as well.

The idea is that Temer's motions could apply to employees in the public and private sectors. Of the 2.39 million people that receive both benefits, 1.67 million earn at least two minimum salaries per month (R$1,760; US$ 550). This group costs the country R$31.4 billion (US$ 9.85 billion) in welfare per year.

Roughly 10,000 people, however, receive more than 20 minimum salaries (R$17,600; US$ 5,500) per month by adding together both benefits. This means an annual welfare cost which is higher than R$ 3 billion (US$ 950 million) for the government.

However, just last year, the INSS (Brazilian Social Security Institute) ended up with a deficit of R$ 86 billion (US$ 27 billion) because of its payments for retirees, the equivalent to 1.5% of Brazil's GDP.

The government aims to have the reform pushed through Congress by the end of the year. It looks like, all being well, a decision will be made on the form, one way or another, by the year after.

Translated by GILLIAN SOPHIE HARRIS

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