ZCZC
BCN-04
BRAZIL-ECONOMY-WELFARE
Battle over Brazil’s pension reform
SAO PAULO, June 15, 2019 (BSS/AFP) – Brazilian President Jair Bolsonaro’s
proposed overhaul of the country’s bloated pension system sparked a
nationwide strike and protests on Friday.
Here’s what the changes mean.
– Working longer –
Brazil is one of the few countries in the world without a minimum
retirement age.
Bolsonaro wants to introduces a retirement age of 65 for men and 62 for
women to enjoy their full pension after they have made contributions for 35
and 30 years respectively.
Not everyone is treated equally, though, with some professions allowed to
retire and enjoy their benefits sooner than others.
Teachers, for example, can stop working five years earlier if they have
paid into their pension fund for 25 years, while police and prison guards can
retire at 55 after 30 years of contributions.
– Approval –
A pared-back version of the original reform proposal was presented to
Congress on Thursday, reducing expected savings from 1.2 trillion reais ($300
billion) in 10 years to around 900 billion reais.
Changing the pension system requires three-fifths of Congress to support a
constitutional amendment.
Some analysts are optimistic the reform could be passed sooner than
expected as the country totters on the edge of recession.
Economy Minister Paulo Guedes warned last month Brazil would “burn” if the
plan was watered down too much or voted down.
– Deficit –
In 2018 Brazil’s pension deficit — including public, private, state,
municipality and military — reached 362 billion reais (almost $100 billion),
which is the equivalent of 5.5 percent of GDP. In 2011 it was 2.1 percent.
The deterioration was largely due to the 2015-2016 recession, which
devastated Brazil’s finances and economy. The country is still struggling to
recover.
Critics of the proposed reform argue that the deficit would improve once
the economy returned to strong growth.
But there is growing consensus in Congress that pension reform is
necessary, particularly as the country ages.
Some 9.2 percent of Brazil’s 209 million people were over the age of 65
last year, official data shows. In 2060, it is projected to be 25.5 percent.
BSS/AFP/HR/0912