Want to support Global Action on Aging?
on pension reform reached
By Jonathan Wheatley, Financial Times
Aug 06, 2003
government leaders in Congress said last night they had reached a deal
that should enable approval today of a controversial reform of the public
sector pensions system.
reform aims to tackle a long-standing deficit in the system that has
increased perceptions of risk among investors and prevented the government
from lowering interest rates, an obstacle to faster economic growth.
of the ruling Workers party (PT) and their allies said they had secured
the support of 380-420 congressmen, enough comfortably to ensure the
three-fifths majority needed to pass the law, which requires making
changes to Brazil's 1988 constitution.
the government was forced to give ground on a number of key elements in
the reform. A salary ceiling for state judges will be set at a higher
level than the government proposed; retired workers receiving up to five
times the minimum wage, currently R$1,200 (US$400) a month, will be
exempted from social security contributions; and civil servants will be
able to retire on full pay of up to 10 times the minimum wage.
Luiz Inácio Lula da Silva, who took office on January 1, postponed a
visit to Africa this week in order to oversee negotiations on the reform.
He has intervened several times over recent weeks as investors have become
frustrated by a lack of progress on the reform, which has been in Congress
for several years.
deal agreed yesterday stipulates that salary caps for state judges will be
applied automatically rather than being subject to approval by state
legislators, a condition demanded by state governors in exchange for their
on reform has been marked by discontent among civil servants, many of whom
retire on full pay far in excess of the new limits. Port officials and
other public sector workers are on strike in protest; a strike by
magistrates was narrowly averted last week.