Approved at the end of 2019, the pension reform is approaching its three-year term with a perspective of impact on public accounts greater than initially projected by the government.
An unprecedented estimate obtained by the Sheet shows that the resource savings provided between 2020 and 2022 should reach R$ 156.1 billion. The value is 78.8% higher than expected for the same period when the text was approved by Congress — R$ 87.3 billion, in figures already updated.
The calculation is by legislative consultant Leonardo Rolim, an expert on the subject and who worked directly in the elaboration and implementation of the proposal as secretary of Social Security and president of the INSS (National Institute of Social Security) in the Jair Bolsonaro (PL) government.
According to him, the evidence collected so far indicates that Social Security accounts should not be an urgent concern in the next governments, depending on possible demographic changes in the country.
The more intense deceleration in the growth of social security expenses has drawn the attention of economists, who cite the finding as a positive factor for the accounts.
For entities that provide assistance to the insured, however, the larger economy with the reform brings with it another face: a scenario of excessively harsh rules, such as the calculation of the pension for death, which failed to pay the full amount precisely when the country saw the number of deaths increase because of the Covid-19 pandemic.
Since the first months of implementation of the reform, economists reported seeing a greater impact of the measure, but still without much data to document it.
A first clue appeared in reports from the National Treasury, which detected a significant improvement in the projections for the INSS deficit. The hole, which before the reform would reach 11.64% of GDP (Gross Domestic Product) in 2060, would reach 8.67% on the same horizon, according to last year’s forecast. In 2022, the finish line has been revised to 7% of GDP.
The Ministry of Labor and Welfare, however, never released new official estimates of the results obtained with the approval of the reform.
Rolim left the government in November 2021, but continues to follow the issue closely. To make the estimates, he started from the projected expenditure on Social Security in the 2020 LDO (Lei de Diretrizes Orçamentárias).
He then compared the figures with actual expenditures in 2020 and 2021 and with the projection of pension expenditures from the 2022 Budget. The calculation considers some adjustment factors to avoid an overestimation of the effects of the reform.
In the civil servants’ own regime, it was necessary to isolate the effect of the salary freeze, since categories have not been readjusted since 2019 (some since 2017). This was done using the initial projection of public servants’ retirement and pension expenditures without correction for inflation.
In the RGPS (General Social Security System), it was necessary to add to the actual expenditure the social security court sentences that were postponed by the PEC (proposed amendment to the Constitution) of the Precatórios. In addition, as the benefits are corrected by the INPC, the inflation index was applied to update the expenses.
After the adjustments, Rolim identified savings of BRL 109.5 billion in RGPS expenses between 2020 and 2022, of which BRL 13.6 billion in the first year, BRL 35.3 billion in the second and BRL 60.6 billion on the third.
The sum is greater than the R$61.7 billion that would have been saved, according to previous government calculations.
In the civil servants regime, the former secretary estimates that the tax gain is R$ 46.7 billion in the three years, of which R$ 10.5 billion in 2020, R$ 15.1 billion in 2021 and R$ 21.1 billion. billion this year.
The total amount is higher than the BRL 25.7 billion that would have been saved in this period, according to initial assessments.
“Surely the next two governments will not need to worry about reforming the social security system. They have to attack other areas in relation to these expenditures, but not in terms of legislation, a new reform. I would venture to say that not only the next two, but probably the next three”, says Rolim.
According to him, even if the next government decides to resume a policy of valuing the minimum wage (which represents the amount paid to two-thirds of Social Security beneficiaries), the favorable trend will be maintained, especially if real gains are moderate and are accompanied by an increase of productivity.
“If there are demographic changes beyond what is foreseeable, you can anticipate, but I think that only for the middle of the next decade will we need a new reform”, he says, listing rural retirement and possible adjustment in minimum retirement ages as points to be revisited in the future.
On the other hand, Rolim points out that Social Security will always be an important issue, as it is the biggest expense in the Budget (R$ 789.7 billion in the most recent projection for this year). Any change ends up having billionaire impacts on the spending ceiling, a rule that limits the advance of expenses to the variation of inflation.
The roof design itself, however, may end up being the subject of changes, depending on the outcome of the October elections.
The president of the IBDP (Brazilian Institute of Social Security Law), Adriana Bramante, considers that the interpretation of the results of the reform depends on the perspective launched on the subject.
“From the protective point of view of pensions for death, it was chaos. Months later we had a pandemic, and the benefits were extremely reduced”, he criticizes.
Before the reform, the pensioner received 100% of the value of the contribution salary of the deceased insured, regardless of the number of family members. After the changes, the calculation starts from a threshold of 50%, with an additional 10% for each dependent. A childless widow therefore receives 60% of the contribution salary.
Bramante argues that the change in the pension calculation rule caught many families off guard. Elderly people who had no previous savings and survived on the benefit of their spouse, for example, lost a good part of their income after the death of the partner.
For her, the ideal is to make the calculation of pensions more flexible, creating a transition rule so that the change is smoother for the elderly population, which has not had time to plan.
The IBDP president also notes that the reform has postponed retirement for many people in a context of worsening labor market, leaving those who needed to contribute for a little longer without formal employment.
Although the Caged (General Registry of Employed and Unemployed) registered 1.3 million new formal jobs in the first half of the year, less than 200,000 were registered in the 40-65 age group.
From a fiscal point of view, the perception of greater impact is reinforced by financial market analysts.
“It is worth mentioning the deceleration in the growth of social security and assistance expenses of the INSS, the largest primary expenditure. There has been a clear inflection in the growth of the number of beneficiaries since the implementation of reforms in recent years”, reported Tullet Prebon’s chief economist, Fernando Montero, specialist in tax analysis.
Critics often cite the INSS queue as a factor that helps to contain government expenses, albeit momentarily. Insured people are left with dammed values ​​while they wait for analysis. However, government technicians point out that the stock of orders fell again after the resumption of bonuses to the agency’s servers.
The queue peaked in July 2019, with 2.34 million requests under analysis, it gradually dropped with the implementation of a bonus per extra task for INSS servers, but rose again in early 2021 with the suspension of this bonus and stabilized at a level between 1.7 million and 1.8 million requests.
At the end of April, the bonus was recreated, and the queue dropped again the following month. In June, the wait had already dropped to 1.5 million applications.
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