Government estimates impact of R$480 billion on LDO, but alternative studies estimate that the cost will be R$1.5 billion
The STF (Supreme Federal Court) is expected to resume its judgment on the decision on the call this Wednesday (20th March 2024) “review of the whole life”. Ministers analyze a resource of the INSS (National Social Security Institute) against a 2022 decision by the Supreme Court itself, which, at the time, allowed the recalculation of pensions based on contributions made throughout life.
In practice, the Court's definition that social security contributions prior to the Real Plan can be used for recalculation would increase the benefit for some Brazilians. The action has general repercussions, which requires the application of understanding to all processes related to the topic.
The mechanism allows the application of a more advantageous rule to review the retirement of insured people who have entered the RGPS (General Social Security Regime) before the law 9,876 of 1999which created the social security factor.
The government estimates a billionaire impact of the decision, worth R$480 billion, considering an average of another 15 years for each beneficiary who applies the correction to retirements and pensions, including retroactive payments. The value was described in the LDO (Budget Guidelines Law) of 2024, but without a description of the expenses.
The value described by the government grew over 4 years. In 2022, the estimated impact was R$46 billion, if half of retirees requested recalculation in the last 10 years. The government stated that R$3.6 billion would be spent on derivatives of the review, R$16.4 would go to readjustments and R$26.4 billion would cover future payments.
In 2024, the value jumped to R$360 billion, according to a technical note released by the INSS. The value considers that all retirees since 1999 would qualify for the benefit.
To the Power360the president of the Association of People Injured by the INSS, Frederico Ruckert, stated that the R$ 46 billion initially presented was already “exaggerated”.
“This exorbitant amount is an attempt by the government to perhaps scare the STF with this issue”declared Ruckert.
The cost is questioned by lawyers in petitions sent to the Court. In an economic opinion requested by lawyers João Badari and Sandro Lucena and published in December of the same year, the note is contested.
According to analysis by experts from AeD Consulting, the data offered by the government presents “methodological mistakes” what “they overvalue the supposed financial impact and, given the way they were disclosed, it is more of a strategy that aims to create external embarrassment among judges”.
The opinion does not provide exact information on the value of the decision to the public coffers. An estimate is presented that the cost could be approximately 20% of the number provided by the Union, but warns that the value tends to be lower, considering the parameters for requesting the benefit. Here's the complete (PDF – 3 MB).
According to Badari, the government fears the action involving the INSS and that is why it took a number to the Supreme Court that did not “reflects reality”. To the Power360the lawyer stated that the costs of the action should decrease over time, not increase.
“The cost of the action is infinitely lower than that of the government, which follows a strategy in the Supreme Court that is to throw inflated values to cause fear in society”said the lawyer.
Another study commissioned by IBDP (Brazilian Institute of Social Security Law) estimates the financial impact of the STF decision at R$1.5 billion.
The survey considers the 2019 Social Security Statistical Bulletin and totals the annual adjustment of R$781.25 per benefit. The total, considering the number of beneficiaries (2,564,736), would reach R$10 billion. However, only 14.92% of the amount could request the benefit. Here's the complete of the study (PDF – 2 MB).
According to João Badari, the measure is not aimed at all beneficiaries, but rather at the “exception”. For retirement to be reviewed, beneficiaries must meet 3 basic requirements:
- not having retired for more than 10 years;
- not having retired after November 2019 – when the Pension Reform rules came into effect; It is
- having received higher contribution salaries before the start of the Real Plan, in July 1994.
For Frederico Ruckert, the values that will be reviewed must remain low, precisely because they are exceptions.
UNDERSTAND
The case was being judged in the Court's virtual plenary session, but was highlighted by the rapporteur himself, Minister Alexandre de Moraes. With this, the analysis was reset, however, ministers can choose to repeat the vote already given.
In the virtual plenary, the score was 4 to 3 to maintain the possibility of reviewing the benefit.
Ministers Edson Fachin, Rosa Weber and Cármen Lúcia voted to establish the date of November 17, 2019 as the milestone for the recalculation. In other words, the possibility of review would be valid from the day of the judgment at the STJ (Superior Court of Justice) which recognized the right to review for retirees. The assessment is that this modulation will win in the trial.
Moraes also voted for the possibility of review to be maintained. However, he defended that the milestone for the recalculation should be from December 1, 2022, the date of the Supreme Court judgment that validated the “life review”.
Ministers Cristiano Zanin, Dias Toffoli and Roberto Barroso voted to annul the STJ decision that allowed retirees who went to court to request the recalculation of the benefit based on all contributions. This way, the appeal would be returned to the STJ, which would have to make a new trial.
Ruckert and Badari defended Moraes' understanding. For both, Zanin's vote on the case is “absurd”.
The president of the Association of People Injured by the INSS said that Zanin's argument is “another untruth” about the benefit. According to him, there is no way for the minister's vote to legally prosper.
Ruckert also said that, if Zanin's vote wins the trial, the consequence will be the Court's lack of credibility, since, previously, the Supreme Court decided on a different understanding. He stated that a possible result favorable to Zanin's vote would affect the country's legal security and, consequently, the arrival of foreign investors to Brazil.
“STF ministers are not there to please the president, they are not there to please a party. They are there to act legally within the precepts of the Constitution”he declared.
Badari said he believes it is difficult for Zanin's vote to win in the trial. If he wins, the trial would return to the STJ and further delay the decision on the measure.
WHAT INSS ASKS
In the appeal presented in May 2023 to the Court, the INSS asks for the suspension of ongoing processes on the subject in higher courts and for the decision to have future effects, allowing recalculation only for actions presented after the judgment in the STF. The request was granted by Moraes.
The agency says in the request that the volume of people who must request the review “without the correct delimitation” of the scope of the decision is “huge”. Consider that, in this scenario, there is a risk of “collapse in the care of INSS insured people”which can lead to undue payments and “exceeding service capacity” of the organ.
The Union requests that the decision take effect from April 13, 2023, and considers the need for the call “effects modulation” (when ministers define the deadline for the decision to come into effect) to preserve legal certainty.
LIFETIME REVIEW
The discussion about the call “life review” comes from questions from retirees about law 9,876 of 1999. The text introduced a new formula for calculating retirement, determining a transition for those who already contributed to Social Security before the Real Plan. The transition milestone would be July 1994.
In the specific case discussed by the STF, a retiree questioned the calculation of his retirement, set by the transition rule at R$1,493. The retiree's defense said that, if contributions made before July 1994 were considered, the retirement value would be R$1,823.
The thesis determines that the retirement calculation may consider all contributions made by the worker, including those prior to 1994, if this option is more beneficial to the retiree.
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