BRASILIA – President Jair Bolsonaro presented on Wednesday a bill to overhaul Brazil’s pension system, a plan that stiffens eligibility rules for social security and is aimed at shoring up public finances.
The proposed constitutional amendment, which unions oppose, would raise the minimum retirement age and also eliminate an option that allows workers to collect a pension solely on the basis of their number of years of contributions.
It also lays the groundwork for the creation of an alternative system of employee-funded individual savings accounts.
The administration’s goal is to encourage the vast majority of Brazilians to gradually switch away from the current regime, in which the public social security system receives contributions from both employees and employers, and opt instead for a new “capitalization system,” in which each worker’s retirement income will depend on his or her own pension savings.
The Economy Ministry estimates that the plan would save the government roughly $265 billion over the next 10 years and help reduce a growing budget deficit, which has been partially fueled by a pension system many economists say is unsustainable.
Brazil’s budget deficit in 2018 was equivalent to 7.09 percent of gross domestic product and the country is expected to suffer a similar shortfall this year.
The budget gap, according to the government and private-sector analysts, is a key element in keeping Brazil – which is slowly recovering from a 2015-16 recession – from resuming a path of sustained economic growth.
Under Brazil’s current system, employees are eligible to retire with a full pension if they meet the minimum age requirement (65 for men and 60 for women) or if they have contributed to social security for a minimum number of years (35 in the case of men and 30 for women).
Bolsonaro’s plan would keep the minimum retirement age for men at 65 but raise it to 62 in the case of women.
However, individuals would no longer be eligible to receive a pension based on years of contributions if they are below the minimum age. Under current rules, some Brazilians younger than 50 are able to retire with a full pension.
In another change, workers would be eligible for partial pensions after 20 years of contributions (up from 15) and for full pensions after 40 years.
Three-fifths of lawmakers in both houses of Brazil’s Congress would have to back the proposed constitutional amendment, which is seen as necessary due to the country’s aging population.
But unions have announced plans for protests against what they regard as an attack on “acquired rights.”