The cheating of the Social Security Reform in Brazil

The cheating of the Social Security Reform in Brazil

Cacildo Marques - Sao Paulo

     There is a massive and almost complete lack of information within the population about the current laws of Public Pensions in Brazil, which allows permanent manipulation by rulers and the press.

     First of all, there is already retirement by age: 65 for men and 60 for women. In the case of rural workers, one decreases five years in each genre.

     There is also retirement for contribution time: 35 years of contribution, for those over 53 years old, if male, and 30 years, for 48 years old, at least, if a woman.

     The above clarifications, followed by more details, are in the FAQs of the Caixa Economica Federal (CEF) website.

     The most recent reform, adopted in 2015, adds a requirement to prevent early retirements, which is the rule 85-95, which since January 2019 became 86-96, as planned. The meaning of this is that someone only has the right to apply for retirement if, being a man, when adding up the contribution years to the years of age gets a total of at least 96. If the person is a woman, should reach a total of 86.

     The difference of five years between men and women did not come, as it was justified many years later, because of the double female journey, in the employment and at home. It was an invention of Colonel Jarbas Passarinho, who, as a parliamentarian, by voting in the 1980s for reform that created Special Retirement of Teachers, at 25 years of contribution, said he did not agree with such low time for men, and made the project determining 25 years for women and 30 years for men. Since then, the discriminatory idea, aiming protection and discrimination of women was extended to all subsequent social security laws. Today, this special retirement at the 25 years of contribution was swallowed by the minimum age of 60 years for male teachers and 55 years for female teachers, according to the reform that entered into force at the end of 2003.

     The most significant change in this 2003 reform was the establishment of the ceiling for benefit receiving. In current values, the ceiling is at BRL 5,800 per month (US $ 1,555 in February 2019). For a system that until 2003 paid pensions of judges with values ​​of up to BRL 35,000 monthly ($ 9,383), this ceiling now solves the great problem of expenditures with a range of public servants regarded as privileged. It is necessary to remember that the immense mass of retirees receives minimum salary, that currently is of BRL 954 monthly (US $ 256).

     What would cause the pension fund to maintain financial health? Let us see some necessary steps.

First, what is collected from the employee and employer's share, in equal proportion, is not a tax, but a "contribution". Not being a tax, it should not be mixed with national treasury money, but keep in own cash, managed by a federal autarky.

     Second, the value of the employer's quota works as indirect wages, which could never be postponed or denied, which means that the government must never waive (dismiss) any employer to deposit this amount.

     Third, informal jobs, which almost never collect the contribution, should be hard pressed to become formal jobs, and, even when informal, monthly contributions should not be neglected. Large numbers of informal employment or unemployment should not be allowed, so as not to provoke a vacuum in the pension fund.

     Fourth, it is okay to pass money from the social security fund to the national treasury, but this should only be done as loan, to be paid according to the Central Bank's basic interest rate, at least.

     Fifth, any beneficiary whose value received does not derive from his social security contributions, according to the minimum requirements, must have his amounts paid for another type of cash, being part of another type of government account other than the social security authority account. This should be the case with the BCC (Benefit of Continuing Care for the elderly), pensions for family members, etc.

     Sixth, employers with old debts, discounting the failed companies, should be called upon to sign a plan of monthly pensions payment, in order to pay off their debt over a number of years.

     Seventh, companies that do not collect the employer's social security quota must lose the bank credit, until the fulfillment of the obligations.

     Eighth, the employee who requires retirement must "retire" in fact, as soon as the service of his demand is published, being absolutely prohibited from continuing to work in the same company and in the same place, even if disguised as a legal entity.

     Ninth, there must be an annual audit, or at least a biannual one, in December, of all the assets of the social security authority.

     Tenth, there must be a short time for the state and municipal systems to adapt to their constitutions and organic laws the existing laws of federal funds.

     All ten of the above measures are designed to enforce current law, preventing drill holes from leaking social security. There is, therefore, no need for constitutional reform to detract more resources from employers or public servants.

     Why then do they want so much a new reform? Because the sanitation measures listed above are not applied. Contributions are mixed with taxes and social security benefits payments are made with national treasury funds, in clear disregard for the rite of separation of accounts. And as formal employment is gradually disappearing, with acceleration guaranteed by the new labor laws, the contributions of employees and employers, tend to be reduced to an almost negligible amount in relation to the total payments that pensions must make on a monthly basis, both to direct payers of its cash and to beneficiaries with no relation to contributions based on the salary.

     As these problems are not corrected, because one does not intend to do so, one can make a new constitutional reform every four years, with the objective of deceiving foreign investors, that the collapse will continue to increase.

     The dogma bragged by the government that without the social security reform the country returns to recession is talk without nexus, fruit of futurology of reading coffee grounds. None of the reform topics submitted to the National Congress in 2019 is positive for the country. Subtract more resources from wage earners will only reduce national income, what is, now yes, a faster way to return to recession.