President Bolsonaro has proposed a legislative bill to the
Brazilian Congress to reform the social security system (the
'INSS'). In summary, the bill increases the age for
retirement, combining it with a minimum contribution time. It
eliminates retirement based only on contribution time. It also
proposes changes to the calculation of pensions and to the minimum
and maximum funding contributions made by workers.
The transitional rules are one of the most controversial
elements of the bill. The statutory severance fund ('FGTS')
monthly contributions (8%) and corresponding severance penalty
(40%) will no longer be due to retired workers. This may pose legal
issues, as FGTS is a constitutional right regulated by federal law.
It is debatable whether a new law can stipulate cases of exemptions
that are not contemplated in the Constitution.
