Brazil passes pension reform bill

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Brazil’s Senate has passed the final amendments to a much debated pension reform a day after the main text of the bill was approved.

The approval of the bill is a major victory for President Jair Bolsonaro after decades of failed attempts to reform Brazil’s social security system.

Had it not been passed, public debt would have skyrocketed, official data suggest.

Mr Bolsonaro said the reform would allow the country “to take off.”

The president had staked much of his political reputation on passing the bill, keen to show he possesses the negotiating skills to push it through Congress.

Main changes
The main change is the creation of a retirement age 65 for men and 62 for women. Other changes include an increase to workers’ pension contributions and the mechanism to calculate benefits.

Teachers, federal police, prison guards and rural workers are among those who will have special rules.

The changes are expected to result in savings of 800bn reais ($195bn; £150bn) over the next 10 years.

They will be phased in over 12 to 14 years. Nothing changes for those who are already retired.

Reasons for reforms
The high costs of the pension system are the main cause of Brazil’s huge budget deficit. Brazil’s public finances have been further hit by weak growth and falling tax revenues, making savings imperative.

President Bolsonaro proposed the reforms back in February saying he could deliver where many previous governments had failed.

An ageing population means that without change, Brazil was looking at spiralling costs.

 

Christopher Ojilere