A new Social Security reform has been inserted on the government agenda, this time together with the factor 85/95 and the minimum age.
After being overlooked and left on the sidelines for some time, the Social Security Pension System is coming back to the crosshairs of the government and businessmen. Although several measures have been inserted on the agenda, the objectives follow the same logic: to reduce the Social Security «expenses» in order to divert more funds to pay the debt interest and boost the billionaire market of private retirement plans.
In order to get a consensus around these attacks, the government rulers resume the old arguments already repeated ad nauseam under Fernando Henrique Cardoso government. The current Social Security Minister, Garibaldi Alves Filho, for example, complained earlier this year that the Brazilian worker retires «precociously.» In a speech that reminds a lot that fateful speech of Fernando Henrique Cardoso calling retirees of «bums,» Garibaldi said: «In Brazil, people retire when they are 53, and it is not fair an individual to retire when he is only 53 years old”. In interview he granted to the Brazil Current Network (Rede Brasil Atual) in January, he also says that «people retire particularly so early that they themselves feel dwarfed in theirretirement”.
The minister was referring to the infamous social security factor imposed in 1999 by Fernando Henrique Cardoso laying down a calculation to force workers to postpone retirement to the fullest. The factor takes into account the age of the worker, the contribution time and the life expectancy calculated under IBGE (Brazilian Instituteof Geographyand Statistics). The social security factor lowers the monthly benefit of those who retire after completing the contribution length of time (35 years for men and 30 for women), but have not yet reached the minimum age (65 years old for men and 60 years old for women). In other words, for Dilma government’s minister, those who «hinder» the retirement of workers is not the social security factor who eats part of the benefit of those who are already entitled to retire, but the Brazilian worker who allegedly retires far too early.
Garibaldi also states that the social security factor has failed in its objective of restraining the «precocious” retirements and defends its radicalization by establishing the factor «95/105», numbers that represent the sum of the contribution period plus the age for women and men respectively. The government plans to include this project in Congress’ agenda as soon as the pressure of the movement for the end of the social security factor increases. Thus, in order to mislead the workers and make this attack resembles a concession, he would replace the current factor, the end of which would be seen as a victory, but he would change this factor for an even worse rule. «We have already had two social pension reforms, but they somehow remained incomplete”, the minister said in the same interview, on which at some point he is not able to conceal his sincerity: «What we want is that we can have a minimum retirement age when the social security factor ends”.
As a transition to the factor 95/105, the government defends the formula 85/95, such as advocated by the trade union centrals CUT and Força Sindical. The website of Força Sindical’s President and Congressman, Paulinho Pereira, plainly state that «parliamentarians connected to the trade union centrals and those congressmen who represent business owners reached a consensus for the replacement of the Social Security Factor by the 85/95 formula». However, wouldt his formula be better than the current social security factor?
Worse than the social security factor
The factor 85/95 has been thought to serve as a counterweight when the current social security factor ends. This proposal is not new. In 2010, a project from Senator Paulo Paim (PT) was approved establishing the end of the factor, but it was vetoed by the then President Lula. At that time, Pepe Vargas (Congressman from PT-RS) presented the factor 85/95 project in case the social security factor was really extinguished. But all has remained as it is. Right now, the trade union centrals resume that proposal which is a long way from being progressive.
The new factor would keep the current minimum period of contribution (35 years for men and 30 for women). In practice however, it would increase the period of contribution and establish a minimum retirement age in order to complete the total sum demanded. That is, this mechanism would be as retrogressive as or even more retrogressive than the current factor, particularly penalizing the poorest people, who need to start working much earlier.
Someone who starts working at age 15, for example, when completing the 35-year contribution period will be 50 years. The sum of his age plus the period of contribution would be 85. Therefore, to achieve the total of 95 he would have to work another 5 years (so it would increase by five years his age and the length of the contribution period would reach 95. Pointing out that, for the government, this formula would be only a transition towards the factor 95/105.
Destroying the Public Pension System
The public pension system and the Social Security system, although still quite insufficient, had been progressive points of the 1988 Constitution, a result of the whole mobilization process of the previous decade. However, the neoliberal policy of dismantling public services reachedt he country shortly after and the public pension system startedto be dilapidated. A comprehensive reform had already been prepared in the Collor government, but it was postponed due to his impeachment. However, in 1999 the FHC government, in the prime time of privatization and scrapping of the state, has succeeded in implementing a reform that, in addition to the security factor, formalized attacks such as changing the term «years of service» by «the period of contribution.» The workers’ resistance, in turn, prevented a deeper attack. However the attempts to do away with the public pension system have remained.
As soon as he was elected, Lula surprised many people when he imposed a harsh attack on the public servants retirement. The pension reform approved in 2003 put an end to their full retirement benefits, creating a supplementary fund (which has only recently been regulated). Nowadays it is known that this reform, which provoked the civil servants’ strikes and demonstrations, was approved through the ‘purchase’ of the congressmen’s votes who were paid with the money collected in the ‘Mensalão’ (monthly allowance scheme), as acknowledged by the Supreme Court.
The factor 85/95 or the minimum age would be the continuity of this process which, even without «formal”reforms, has been going on. While the government and much of the press warn about a supposed deficit, policy exemptions of Dilma’s government has exempted businessmen from 40 sectors of Brazilian industry from payingthe 20% tax intended for Social Security. This tax used to be imposed on the payroll. Even the Treasury Minister, Guido Mantega recognizes that this benefit to the business owners will prevent the governments from collecting almost R$ 13 billion only in 2013 and about R$ 60 billion in four years. A shortfall in the Social Security funds that will, in a near future, be used as justification to accelerate a new reform.
Social Security Factor
Established in 1999, it lays a calculation that takes into account factors such as the age of the taxpayer, the contribution time and the life expectancy. In general, it reduces the benefits of those who retires after completing the contribution time but is still below the minimum age (65 men and 60 women).
Factor 105/95
It is a rule advocated by the Social Security Minister which establishes full retirement benefits only for those whose contribution time plus the age reach, respectively, 105 for men and 95 for women. In practical terms, it increases the contribution time and imposes a minimum age.
Factor 85/95
It is the rule advocated by CUT and Força Sindical and works in the same scheme of factor 105/95. In some cases it comes to be even more injurious to the worker than the social security factor. The government sees it as a mere transition to the factor 105/95.
