Romanelli: Pension reform is the most serious attack on workers since 1988.

By Luiz Claudio Romanelli, in Esmael's Blog - "Cruel, inhumane, a true attack on the dignity of the human person," Luigi Bellodi said, commenting on Temer's pension reform.

The pension reform presented to the National Congress is the most serious of all the threats to Brazilian workers produced so far by the Temer government.

Just shy of his first 100 days in office, the president sent the pension reform proposal to Congress.

It is almost unanimously agreed that reform is necessary, since the Social Security system is registering a growing deficit: in 2016, the INSS deficit reached R$ 149,2 billion (2,3% of GDP) and in 2017, it is estimated at R$ 181,2 billion.

The federal government estimates that it will save approximately R$ 740 billion over 10 years, between 2018 and 2027, with the proposed changes.

If the alleged deficit justifies this injustice, the government should attack the real causes: tax exemptions (R$ 88 billion in 2015); tax evasion, which deprives the Social Security system of more than R$ 100 billion per year; and, above all, collect the outstanding debt owed to Social Security, which totals R$ 340 billion.

The government's proposal sets a minimum retirement age of 65 for both men and women and raises the minimum contribution period from 15 to 25 years. Both requirements must be met to receive the benefit.

There will be a transitional rule for men aged 50 or older and women aged 45 or older who will be able to retire under current rules, paying a 50% surcharge on the time remaining until retirement.

The calculation of retirement benefits changes. The reform eliminates both the social security factor (average of the 80% highest salaries received since July 1994) and the 85/95 rule (55 years of age plus 30 years of contributions for women, 60 years of age plus 35 years of contributions for men). The benefit will be calculated based on 51% of the best contributions plus an additional 1% for each year paid.

Although necessary, the reform came out harsher than expected. It will make it almost impossible for workers to retire with the maximum benefit (R$ 5.189,82). To retire with the full amount, it will be necessary to contribute for 49 years. If it is already very difficult for a worker to retire receiving the maximum benefit under the current rules, with the change it will be practically impossible.

Another proposal that I consider drastic is the reduction of survivor's pensions. It will be reduced to 50%, plus 10% per dependent, for all insured individuals (INSS and public service). The pension should be decoupled from the minimum wage adjustment, which allows for real gains. The proposal is unconstitutional since the Constitution stipulates that the benefit should not be less than the current minimum wage. In the case of a worker who receives the minimum wage of R$ 880,00, how will his widow survive on a pension of R$ 440,00?

The government also proposes that the Continuous Benefit Payment could be paid below the minimum wage and intends to raise the age of beneficiaries to 70 years. Currently, the benefit guarantees a monthly minimum wage to seniors over 65 or citizens with disabilities and is an instrument to reduce poverty and income inequality.

The proposed amendment revokes the special retirement benefits for elementary and high school teachers and civil police officers.

However, military personnel, firefighters, and military police will be excluded from the changes. I consider these alterations questionable. The special retirement benefits for teachers and police officers exist because the activity they perform is also risky and dangerous. Furthermore, in the case of police officers, why differentiate between civilian and military police officers if both occupations involve risk and danger?

Public servants will also only be able to retire at age 65. The proposed constitutional amendment (PEC) obliges states to create supplementary pension funds for new employees, similar to what the federal government and some states, such as Espírito Santo, São Paulo, and Minas Gerais, have done. Employees will have their benefits limited to the INSS (National Social Security Institute) ceiling, and may receive a supplement if they wish to join the fund. The proposal also foresees the end of parity between active and retired public servants and affects all those who entered public service before 2003 and have not yet retired.

The proposed amendment also aims to raise the contribution rate for federal public employees from 11% to 14%, which will also imply increases in state and municipal pension systems.

This will represent a larger discount on the paychecks of public employees, at a time of recession. I believe that the increase in rates should be progressive – those who earn more should pay more.

I also consider the transition rules of the reform to be highly questionable. Anywhere else in the world, a change of this magnitude would be planned to take effect in practice only after 10 or 15 years. Here, it will come into force the day after it is enacted, which already generates apprehension and uncertainty.

On the other hand, there are some very good changes. One welcome change is that the pension reform will equalize the rights and benefits of private and public sector workers. In the case of public servants who do not fall under the transition rules and who entered service before 2003, the receipt of retirement benefits based on the full salary of the public servant will be eliminated.

The change will not alter the pension deficit in the short term, but in the long term it will be crucial for balancing the accounts. A study by economist Nelson Marconi, executive coordinator of the Economics Forum at the Getúlio Vargas Foundation, reveals that in 2015 the deficit for payments to 980 retired federal government employees was practically equal to that of the entire INSS (National Social Security Institute) – 32,7 million people (R$ 92,9 billion versus R$ 90,3 billion).

Another commendable initiative is that elected officials, such as senators and federal representatives, will also be subject to the same rules as all other Brazilians.

The text of the proposed constitutional amendment needs to be debated and improved by parliamentarians, especially since it was not previously discussed with society and with representative workers' organizations.

Since this is a change that affects the lives of all Brazilians and will also have repercussions on state and municipal pension systems, I hope that parliamentarians will have the good sense to analyze all the pros and cons so as not to deepen inequalities or maintain privileges.

Have a good week! Peace and blessings!