Pension reform in SP is enacted and becomes effective in 120 days

The reform of the São Paulo City Hall Pension Plan was enacted this Friday (19) by the president of the Chamber, councilor Milton Leite (DEM). With that, the new rules for active and retired servants begin to take effect in 120 days.

The PLO (Project for Amendment to the Organic Law) 7 was approved at dawn on the last 11th. In addition to the basic text, seven amendments were accepted. This type of project does not need the sanction of Mayor Ricardo Nunes (MDB), who sent the matter to the Legislature, as a matter of urgency, in September.

Nicknamed Sampaprev 2, since it is the second social security reform in the city of SP since 2018, the changes displease the servers. They believe that the changes take away rights and harm the category. One of the main criticisms is the “forfeiture of pensions”, that is, the end of the exemption of retirees and pensioners.

City officials went on strike between October 15th and November 10th with the aim of removing the project from the Chamber. In addition, the category protested weekly in front of the Legislative building. Even on polling day, the act ended with a confrontation between the GCM (Metropolitan Civil Guard) and the protesters.

The city hall, in turn, defends that the bill reflects the concern with the sustainability of the municipal pension system and with fiscal responsibility. With the new rules, the estimated deficit should go from BRL 171 billion to BRL 60 billion. According to the administration, the reduction paves the way to increase levels of investment in areas such as Health and Education.

It is worth remembering that together with the reform of the municipal social security system, Ricardo Nunes’ administration also sent a package of changes to the employees’ careers, whose projects have already been approved by councilors in previous weeks. The 30% readjustment in commissioned salaries, the vacation system, reduction in paid absences and the creation of a career for assistants were some of the changes.

SP reform | See the main changes

End of exemption for retirees

• Among the main changes is the end of the exemption for retirees and pensioners
• Starting next year, all inactive employees will pay 14% rates to Iprem (Institute of Municipal Social Security of São Paulo)
• Today, only those who earn above the INSS (National Social Security Institute) ceiling of BRL 6,433.57 in 2021 should contribute
• An amendment ensures that there will be no differentiation in rates between active and inactive workers.

Minimum retirement age

• The rules for retiring people will change. The bill says that the minimum age goes from 55 to 62 for women and, for men, from 60 to 65 years old.
• In the case of teachers, it is five years less, that is, men aged 60 and women aged 57
• The minimum contribution time was kept at 30 years for them and 35 years for them.
• The change in retirement applies only to new employees
• The others enter into the transition rule, which is the same as provided for by the reform of the federal Social Security system, that is, a reduction of one year of age for each year of contribution that exceeds 30 years, if a woman, and 35 years, if a man
• The determination is provided for in one of the seven amendments approved by councilors.

Benefit calculation

• There is also a new calculation to retire
• All employees who joined after December 31, 2003 will have the benefit calculated based on the average salary for the entire contribution period.
• Currently, Iprem considers the average of the 80 highest salaries
• The change could reduce 30% of the value of future pensions, estimates Sinpeem (Union of Professionals in Education in Municipal Education of São Paulo)

pension for death

New provident fund

• Revenue from rents from city hall properties, from privatizations and from IR (Income Tax), for example, will be allocated to the Capitalization Regime, called Funprev
• This means that workers who joined the municipality after December 27, 2018 will contribute to this fund and will not contribute to the pension payment of those who entered before this date.
• The so-called Funfin, in turn, will cover retirees and employees appointed before December 2018
• Employees fear that the change could dehydrate the fund, raising the risk of bankruptcy of the Municipal Security
• The city counter that there is the possibility that civil servants may be transferred to the capitalized fund when it has a surplus (when contributions exceed the amount of payments)
• According to an approved amendment, the city hall has up to 30 days to present to the City Council which properties will be given as guarantee for the maintenance of Iprem​