What's Happening with Pension Reform in Brazil?

This page will be regularly updated as the pension reform bill proposed by the Bolsonaro administration develops in Congress. 

The need for pension reform in Brazil is an old refrain, but one that has gained new urgency as demographic shifts and diminished federal revenues threaten the pension system’s fiscal solvency. The current system functions as a pay-as-you-go model: the working population pays a tax which is transferred to recipients as pension payments. Public accounts are balanced when expenditures are equal to or less than revenues from this tax. However, expenditures have exceeded revenues for years, with a combined shortfall of 4.5 percent of GDP according to the OECD. In 2017, the government accumulated a deficit of more than R$200 billion (US$61.3 billion) in order to meet its pension obligations. The current pension system moreover reinforces existing inequalities, with higher-paid civil servants and military officers receiving roughly six times as much as private sector employees.

Read “The Case for Pension Reform in Brazil: An Unequal and Exhausted Retirement System on the Verge of Collapse.”

Yet the road to genuine reform is a complicated one. In Brazil, a constitutional amendment (PEC) is required to modify pension laws because the right to retirement benefits is engraved in the 1988 Constitution. As a result, Congress must hold numerous committee and chamber votes on the measure, and ultimately three-fifths of Congress (308 votes in the House and 49 votes in the Senate) must vote in favor of reform—and pension reform is almost always unpopular. Once approved by the two chambers, however, the proposal does not go to the president for sanction or veto; it is directly enacted by Congress. Past presidents have had to accept watered-down versions of their proposals, amounting to little more than kicking the can down the road. Will this government have more success?

 

2019 PENSION REFORM TRACKER

 

March 13, 2019

  • Lower House sets up its Committee of Constitution and Justice (CCJ) to analyze the government’s proposal to overhaul Brazil’s pension system, and first-term Congressman Felipe Francischini (PSL-PR) is elected as the CCJ’s new president. The Commission is given five sessions to discuss the proposal. 
  • The Ministry of Defense submits a proposal for pension reform for the military regime to the Ministry of Finance. The changes in the proposal are considered less aggressive than those stipulated for civilians. Defense Minister General Azevedo e Silva confirmed that the final text will be sent to Congress on March 20.  

 

February 26, 2019

  • Opinion research released by the National Confederation of Transportation (CNT) finds that 45.6 percent of the population reject the pension reform proposal and 43.4 percent approve it. Polling was carried out in 137 municipalities in all 25 states.
  • Bolsonaro holds a meeting with party leaders to discuss the proposal. 

 

February 20, 2019

  • President Jair Bolsonaro delivers long-awaited pension reform bill to Congress. A presentation of the proposal drafted by the economic team is available in Portuguese. 
  • To learn what steps the bill must take in Congress to get approved, read this article by the Brazilian Report.

 

You can follow the trajectory of the proposal in the Chamber of Deputies here

Image by Agência Brasil
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