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The bill will raise the minimum retirement age and increase workers’ pension contributions.
Following a majority vote in the Senate, Brazilian Congress approved Tuesday President Jair Bolsonaro’s proposal for neoliberal pension reform, one of his main and most controversial measures to “fix” the economy when elected in 2018.
As a constitutional amendment, the reform required the support of 49 among the 81 senators to be validated, yet it received massive backing as 60 senators voted in favor and 19 against.
“The Brazilian Parliament today shows political maturity (…). It shows the commitment of the National Congress to the country's agenda, ”said Senate President Davi Alcolumbre, before announcing the result.
The proposal, also previously massively approved in the Chamber of Deputies, provides for savings about US$ 200,000 million within 10 years, to help adjust the accounts of a lethargic economy, the Brazilian government says.
The move boosted Brazilian markets and stocks as the Ibovespa index marked Tuesday a second consecutive record, closing at 107,381 points (+ 1.28%), driven by the expectation about the imminent approval.
Currently, Brazilians can retire after contributing to the social security system for a period between 15 and 20 years. The reform ends retirement by contribution time and instead bases it on age.
According to the new bill the age of retirement is set as women must be at least 62 years old to be able to retire and men 65 years old, whether they work in the public sector or in private companies. Currently, in the private sector, women can retire with 30 years of contributions and men with 35, regardless of their age.
Then the person will be entitled to a pension calculated at 60 percent of all wages he or she received during his or her working life.
To get a pension equivalent to 100 percent of the average salary, the worker must contribute to social security for 40 years.
Critics of the proposal argue that it will lead to the exclusion of the majority of the population from social security, an effect that stands in contrast to the pension model established in the 1988 Constitution.
Bolsonaro's proposal was also seeking to directly promote an individual capitalization system for the pensions of Brazilians. That part, however, was withdrawn from the second version of the bill after being lawmakers pushed against it in previous discussions.
Paulo Kliass, a member of the Brazilian Association of Economists for Democracy (Abed), commented that his country is not well informed about the proposal.
He challenged government data on the supposed "social security crisis," for they are part of neoliberal propaganda that is aimed at convincing the people that "if there is no reform, Brazil will break down."
Bolsonaro’s administration has other reforms on the way, including the reform of the tax system.