See what changes in the INSS payroll

​Provisional measure 1,106, which changes the rules of payroll-deductible credit from the INSS (National Social Security Institute) and expands the loan to the beneficiary of the BPC (Benefício de Prestação Continuada) and Auxílio Brasil, came into force this Friday (18) .

According to the MP, INSS retirees and beneficiaries of the BPC and Auxílio Brasil will be able to commit up to 40% of their monthly income to the payroll loan.

The changes are part of the Income and Opportunity Program, a package of economic measures launched by the federal government this Thursday (17) for the election year. The program also includes the anticipation of the 13th of the INSS and a new round of withdrawals of up to R$ 1,000 from the FGTS (Fundo de Garantia do Tempo de Serviço).

Despite the publication of the measure, banks and finance companies are awaiting the updating of government systems and the publication of details that allow putting the news into practice. Until then, although they are already in effect, it is not possible to make contracts with the new rules.

Payroll credit is a loan whose value of the installments is deducted directly from the payroll or benefit. This guarantee for banks and financial institutions makes the interest rates of the modality the lowest in the market.

How will the payroll of retirees be?

With the changes, the retiree will be able to commit up to 40% of the monthly social security income to the loan. The previous rule allowed to allocate up to 35% of the INSS retirement or pension to pay installments, 30% with a payroll-deductible personal loan and up to 5% with a credit card.

Now, the new 40% limit can be used entirely to pay off a personal loan. The retiree or pensioner can also set aside 5% of this limit to reduce debts incurred on the credit card or to make withdrawals with the credit card.

Loans guaranteed by retirement and pensions are only approved after cross-referencing data with the INSS, which is done by a system run by Dataprev, a public technology company.

According to Febraban (Brazilian Federation of Banks), the new 40% limit can only be released when Dataprev updates the system and after the INSS “establishes any details in specific ordinances”.

The Ministry of Labor and Welfare confirmed that a new normative instruction from the INSS will be necessary, but did not give a forecast of when this will be done.

For INSS retirees and pensioners, there is an interest limit established by the government. In December 2021, the maximum rate increased from 1.80% per month to 2.14%. On the payroll credit card, the rate, which was 2.7% per month, went to 3.06%.

The number of installments is also controlled. Today, the INSS payroll can be paid in up to 72 installments (six years).

CONSIGNED TO THOSE WHO RECEIVE BPC

The provisional measure releases consigned credit for BPC beneficiaries, without establishing any difference in relation to INSS retirees and pensioners. But, for the same reasons, financial institutions will only offer this credit after updating Dataprev and publishing normative acts.

The BPC pays a minimum wage (R$ 1,212) to the elderly over 65 years of age and people with disabilities who live in poverty, with a family income of up to a quarter of the minimum wage per person.

Those who receive the benefit will therefore be able to commit up to R$ 484.80 every month to pay a payroll loan. Within this amount, up to R$ 60.50 can be used for withdrawals and purchases on the credit card or to reduce debts on that card.

Adriana Bramante, president of the IBDP (Brazilian Institute of Social Security Law), says that the opening of consigned credit for those who receive the BPC is worrying, because this is a benefit that offers a minimum income to poor people who, in most cases, already are in debt. “That will make them worse off,” she says.

For Roberto Santos, president of Ieprev (Institute of Social Security Studies), many BPC beneficiaries are in a vulnerable situation and do not have the discernment to take on a loan.

“Furthermore, it is a benefit that can be reviewed every two years. If the BPC is suspended, will the person retain the debt?” Santos asks.

CONSIGNED FOR BRAZIL AID DEPENDS ON REGULATION

Those who receive Auxílio Brasil will also be able to authorize a discount of up to 40% on the benefit to reduce debts with loans and financing, according to the MP. The provisional measure says that this situation depends on regulation – which, according to experts, should occur through a decree by President Jair Bolsonaro (PL).

A substitute for the Bolsa Família program, Auxílio Brasil currently transfers at least BRL 400 per family, thanks to a temporary increase until December 2022. Thus, those who receive BRL 400 could commit up to BRL 160 per month in payroll.

Until the publication of this report, the government did not clarify what the conditions will be, such as a limit on the interest rate and number of installments.