2017.11.2220:27:00UTC+00BRAZIL: New Pension Reform Bill Will Save 40% Less Than Original Proposal

The revised version of the pension reform bill should save around R$ 480 billion in public expenditures in the next decade - or around 60% of the R$ 800 billion cut expected in the original version of the legislation - said Brazilian Finance Minister Henrique Meirelles.

The Brazilian government backed down from the original bill of the pension reform and settled for a watered-down version of the bill to ensure that it would have enough votes to pass the legislation in Congress.

Lawmakers were wary of supporting the pension reform because the draft law envisions a variety of unpopular measures a year before general elections in Brazil.

According to Meirelles, the revised version would still increase the minimum retirement age to 65 years for men and 62 years for women.

However, the revised bill eliminates a clause that obliges Brazilian workers to contribute to the government's social security fund for at least 25 years before being eligible for retirement payments.

In the revised version, that requirement drops to 15 years - the same time envisioned under the current legislation -, but at a cost - lower retirement payments. To get the full benefit, workers would have to contribute for more years.

"The minimum contribution time goes from 25 years to 15, but whoever contributes during 15 years and reaches the minimum age will receive 60% of the retirement ceiling. The benefit goes up slowly and only reaches 100% after 40 years of contribution," said Meirelles.

In Meirelles opinion, "there is an incentive to work a bit more to have a better retirement."