Administration, governors reach accord on pensions

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Administration, governors reach accord on pensions

By Renato Andrade/José Ramos

AE Brazil 16 April, 2003

The administration of Brazilian President Luiz Inácio Lula da Silva and all 27 state governors reached agreement Wednesday on the shape of a broad pension reform bill, Welfare Minister Ricardo Berzoini said.

President Lula met with the governors during most of the day Wednesday to iron out details of a proposal he will send to Congress next week.

Berzoini outlined the following points, all of which will be included in the president´s proposal:

--Elevation of the minimum retirement age to 60 for men and 55 for women from the current 53 and 48,

--"Transition" rules for current workers, allowing them to retire earlier than the 60- and 55-year limits; the transition rules will be based on discounts from normal benefit levels,

--Retirement taxation for current and future civil service pensioners; government retirees will be taxed at a rate of 11% on that portion of their pensions exceeding a minimum to be set by law; the probable minimum is R$ 1,058 per month (R$ 3.09 = $1.00); currently, civil service retirees pay no retirement taxes,

--Setting of maximum benefit levels for civil service pensioners in order to eliminate so-called "double dipping," the practice by which some government workers obtain multiple pensions.

Berzoini said details of the pension reform will be worked out by a technical task force over the next few days, with a draft bill ready for Congress next week.

He said, "There was much discussion and many changes in the details of the proposal, but, in the end, support among the governors was unanimous."

Berzoini said the reform will save the government some R$ 56 billion over the next 30 years. He said the reform was designed to make the nation´s retirement system self-sustaining.