Banks press for increase in INSS payroll interest

The banks have been pressing to increase the interest on the payroll loan from the INSS (National Social Security Institute) and have presented a proposal to the CNPS (National Social Security Council) to raise the maximum rates by up to 19%. Institutions ask that the maximum interest charged on the loan rise from the current 1.80% to 2.14% per month (up 18.9%). The payroll credit card rate may increase from 2.7% to 3.06% (13.3% more).

The intention is to put the new limits to a vote at the council meeting on the 25th, to start being applied by banks and finance companies. The initial proposal, rejected by board members, established an increase of almost 30% for the loan and almost 20% for the INSS credit card. Under this proposal, rates would rise to 2.3% for credit with a retirement discount and 3.2% for the payroll card.

According to a survey by Febraban (Brazilian Federation of Banks), payroll is used mainly for retirees and pensioners to pay debts and essential expenses. The rise in interest rates and the increase in the cost for institutions to raise payroll-deductible funds, in addition to a drop in the granting of this type of loan, are among the banks’ explanations for the request to review the rates. See Febraban’s response below.

The banks request:

.For the benefit discount loan (maximum rates):

.For payroll credit card (maximum rates)

pandemic package

The reduction in the payroll rate and the extension of the payment term were part of a package of measures by the federal government in 2020, adopted in light of the worsening economic crisis during the coronavirus pandemic. In March 2020, the National Social Security Council approved the reduction of the maximum interest charged on the INSS payroll loan, which fell from 2.08% to 1.80% per month. The card rate dropped from 3% to 2.70%. The package also authorized the extension of the term for the retiree to pay the debt, which rose from six to seven years.

what the banks say

Febraban, which represents the banks, highlighted, in a statement, the importance of payroll in the retired person’s life. “It particularly serves the low-income public, with a relevant portion of negative and unbanked people who, were it not for this alternative, would be forced to resort to other lines of credit with rates and terms totally incompatible with their needs.”

According to the organization, the granting of this type of loan has been falling in recent months (from R$ 9.37 billion in April to R$ 7.18 billion in October, according to Central Bank data provided by Febraban). “Without payroll-deductible credit, retirees are forced to resort to more expensive lines of credit, including the risk of looking for loan sharks,” he says.

“The main cost of payroll loan operations is the funding that financial institutions have to offer the product. Maintain the current payroll interest rates, given the considerable deterioration of these costs – with inflation above 10%, the current level of the Selic, with an upward trend, and even with the 5-year DI at almost 13% – strongly pressures costs to offer the product and directly impacts the capacity of banks to grant this important line. funding cost and expenses make it impossible to grant benefits to a significant portion of these retirees and pensioners, particularly in this period at the end and beginning of the year.”

in high rhythm

The Central Bank accelerated the rate of interest rate hikes and the market has also raised expectations for the Selic (which reflects on the interest charged to companies and individuals) for next year. The projection is that the base rate of the economy will end 2021 at 9.25% per year and at 11% in 2022, according to a Focus survey, released by the Central Bank. Itaú started to project a Selic of 11.75% in the first quarter of 2022. The current rate, of 7.75%, is the highest in four years and the Central Bank indicated a new increase at the next meeting, in early December, to at least 9.25% per year.

Main uses of payroll

Febraban survey on the destination of the loan obtained by INSS retirees and pensioners (data from the first half of 2020):

• Paying debts: 65%
• Paying for medicines and/or exams: 21%
• Renovate property: 19%
• Pay day to day bills: 17%
• Buying food: 12%

Larger margin for payroll

• In March 2021, the government authorized an increase in the payroll margin to 40% for INSS beneficiaries and public servants by the end of this year
• In January 2022, the special measures applied in the INSS payroll expire and return to the old rules. See what changes in payroll in 2022
• The expansion had already been adopted in 2020 to try to reduce the economic impacts generated by the Covid-19 pandemic

Consult your statement

The insured can consult the loans linked to his/her benefit through Meu INSS

1. Access My INSS with login
2. Click on the “Loan Statement” option
3. If you receive more than one social security benefit, consult one at a time
4. The screen will show the benefit information and the consignable margin
5. If you prefer to print, click on “Download PDF”

Keep an eye

• Discounts from loans and other debts can only be made on retirement if authorized by the beneficiary
• The retired victim of financial harassment or abuse can request the refund of the discounted amounts