Basic Text of Social Welfare Reform Approved in Second Round Vote

RIO DE JANEIRO, BRAZIL – The Chamber of Deputies approved this Wednesday morning, August 7th, in a second round, the basic text of the Social Welfare reform by 370 votes in favor to 124.

The text passed by deputies may still be changed in the Chamber, as seven proposals (called “destaques”) will need to go through specific votes , scheduled for later Wednesday. After approval by the Chamber, it will be required to pass through the Federal Senate’s screening, which includes voting in the Committee on Constitution and Justice (CCJ) and in two rounds in the Chamber plenary. The support of 49 of the 81 senators will be required.

Unchanged, the text ensures a saving of R$933.5 billion (US$233.4 billion) in ten years, according to estimates by the Ministry of Economy released in July.

The bill approved by the Chamber fixed minimum ages for retirement: 65 years (men) and 62 years (women). The minimum qualifying contribution period remains the current 15 years, despite attempts to increase this requirement. Categories such as teachers and policemen will enjoy milder rules.

For rural workers and beneficiaries of the Continuous Cash Benefit (BPC), paid to the elderly and low-income people with disabilities, nothing in the current rules changes. These categories were protected at the very beginning of negotiations, with resistance from legislators.

It is currently possible to retire by age – at 60 (women) and 65 (men), with a minimum contribution of 15 years – or by length of contribution, with no minimum age, but with contributions of at least 30 years (women) and 35 years (men). With the reform, retirement by length of time is over and everyone will have to comply with the minimum age to retire.

The new criteria will apply to those entering the labor market after the enactment of the reform rules. Those currently working and contributing to the INSS or the public sector, in turn, will be able to choose between the five transition rules available to them, whichever one benefits them the most.

According to the text approved by the Chamber, the new rules will not apply to state and municipal civil servants with their own social welfare system. An agreement is being drafted to include states and municipalities in the Senate in a parallel proposal.

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