Lowering the payroll ceiling harms beneficiaries, says Febraban

Febraban (Brazilian Federation of Banks) said on Thursday (January 11, 2024) that the reductions in the interest ceiling on payroll loans for INSS (National Social Security Institute) beneficiaries reduces the supply of credit lines aimed at the highest risk groups.

O CNPS (National Social Security Council) approved on Thursday (11 January), unanimously, a new reduction in the ceiling for payroll loans aimed at retirees and pensioners. The limit will go from 1.80% to 1.76% per month. The board also decided to reduce the ceiling for credit card and benefit card operations, from 2.67% to 2.61% monthly.

Febraban said it understands that “Setting the interest ceiling at an economically unfeasible level, as has been the case, causes losses to INSS beneficiaries who are at greater risk, such as older retirees with lower incomes.”.

This is because, according to the entity, the ceiling reductions made since last year mean that the rates no longer cover the costs of the credit line. Febraban states that the payroll has been used by INSS beneficiaries to pay off debts and bills, pay for medical expenses and to buy food.

With the reduction in supply, “retirees are having to resort to other types of credit, with significantly higher costs, especially those who are negative”. This movement, said Febraban, harms “especially the population with lower purchasing power and advanced age”.

Febraban stated that it will continue “seeking to demonstrate” that, in practice, reductions in the payroll interest ceiling “are having a harmful effect on the most vulnerable section of this INSS population, who need credit on more accessible terms”.

ABOUT CNPS

The National Social Security Council is part of the Ministry of Social Security, commanded by Carlos Lupi. Among its functions are:

• establish general guidelines, participate, monitor and systematically evaluate pension administration; It is
• evaluate policy decisions related to Social Security.