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60-636: Besides the General System, states and municipalities can establish their own systems financed by specific contributions. The INSS was created by Decree No. 99.350 of June 27, 1990, which merged the Instituto de Administração Financeira da Previdência e Assistência Social (English: Financial Administration of Social Security and Assistance), or IAPAS, and the Instituto Nacional de Previdência Social (English: National Social Security Institute), or INPS. It

120-403: A compulsory social security insured person. The optional member becomes insured when they pay their first contribution. INSS offers twelve types of social security benefits, one welfare benefit and two social security services. The benefits are different from the services because they are monetary, and the welfare benefits are different from the social security benefits because they do not require

180-619: A contribution. These benefits are: The loss of insured status will not be taken into account for the granting of retirement for length of service. Retirement for contribution time, age and special retirement are irreversible and cannot be waived: once they have received their first payment, withdrawn the PIS or the Guarantee Fund (whichever comes first), they cannot give up the benefit. Workers do not have to leave their jobs to apply for retirement. They are commonly referred to as Loas (in reference to

240-660: A decree granting pensions to masters and teachers who completed thirty years of service, with an allowance of one-quarter of their income for those who continued to work beyond this period. In 1888, retirement rights for postal workers were formally regulated. The 1891 Constitution extended pension rights to civil servants in cases of disability, although it did not cover other categories of workers. Law No. 3.724/1919 established accident insurance in Brazil, mandating that employers provide compensation for work-related accidents. The development of Brazil's social security system began with

300-567: A highly diversified network of around 1,500 service units, known as Social Security Agencies (APS), present in every state of the Federation. The Executive Offices (GEX) total 104, distributed into sectors and sub-sectors. The income paid by the Social Security system is used to ensure the support of the worker and their family when they lose their ability to work due to illness, accident, pregnancy, imprisonment, death or old age. However, despite

360-470: A shrinking working-age population, among other factors. Key aspects of PEC 287/2016 included: Despite the broad scope of the proposed reforms, the processing of PEC 287/2016 faced significant challenges. In February 2018, the Temer government announced the suspension of PEC 287/2016 due to prolonged negotiations with parliamentarians and negative public reactions. Additionally, there were complications related to

420-471: A tripartite funding model for social security, involving contributions from employees, employers, and the state. This model aimed to ensure a comprehensive approach to social protection. The 1946 Constitution further developed the social security framework by formalizing protections against death, illness, disability, and old age. The remaining CAPs were consolidated into a national fund through Decree No. 34.596/1953. Subsequently, Law No. 3.807/1960, known as

480-524: Is currently regulated by Law No. 8.036 and Decree No. 99.684 of 1990. Until September 13 of 1966 , the date of creation of the FGTS, there was only one employment guarantee to the worker: the decennial stability. This occurred when the employee completed 10 years of work at a company, on which occasion the employee became stable . After acquiring stability, the employee's employment contract could only be terminated with just cause, requiring verification of

540-549: Is lower than applications such as savings accounts . The fund's account is not adjusted by the official inflation index , the Extended National Consumer Price Index (IPCA), but by the Referential Rate (TR). The remuneration rule was changed by MP 889/19, making the FGTS start to yield more than savings or CD . In December 2016, the then Minister of Finance , Henrique Meirelles , confirmed that

600-639: Is possible to receive a subsidy above the limit. Social security in Brazil Social security in Brazil has its origins in the 1824 Constitution , specifically through a system of "public aid" provided by private initiatives such as the Santa Casa de Misericórdia . Social security, along with public health and social assistance, forms part of the broader social welfare system. The Instituto Nacional do Seguro Social (National Social Security Institute - INSS), responsible for managing social security benefits,

660-506: Is responsible for implementing the protection of the rights of the clients of the General Social Security System (RGPS), which currently covers more than 40 million taxpayers, as well as helping to minimize social inequalities. The institute has an administrative staff of almost 18,000 active employees, located in all parts of the country, who provide face-to-face assistance to more than four million people every month. It has

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720-873: Is supported by the Sistema Único de Saúde (SUS) , among other workers' rights. Article 195 of the Constitution outlines the financing of social security: Art. 195. Social security shall be financed by society as a whole, directly and indirectly, under the terms of the law, through resources from the budgets of the Union, the States, the Federal District and the Municipalities, and from the following social contributions: I - employers, levied on payroll, turnover and profit; II - from workers; III - on revenue from betting contests. Since

780-513: Is the option of paying 11% of the minimum wage. Law 12.470/2011 introduced a contribution rate of 5% of the minimum wage for all citizens who do not work, have no income of their own, belong to a low-income family and are registered in the Federal Government's Single Registry for Social Programs. For Individual Contributors, there is also the option of formalizing as a small business owner and becoming an Individual Microentrepreneur (MEI), so

840-423: The 1988 Constitution , the budgets of the federal government, the states, the Federal District, and the municipalities must include funds for social security. Brazil's social security system operates under a solidarity welfare model, where current beneficiaries are supported by the contributions of active workers. In this model, the working generation funds the benefits of retirees, who in turn will be supported by

900-512: The Federal Senate , the proposal was definitively approved on October 23, 2019. Senator Tasso Jereissati was the rapporteur for the proposed constitutional amendment in the Senate's CCJ. The amendment was promulgated on November 12, 2019, becoming the 103rd amendment to the 1988 Constitution. According to economists, public coffers are expected to save R$ 800 billion in the first 10 years after

960-460: The Sistema Nacional de Previdência e Assistência Social (English: National Welfare and Social Assistance System), or SINPAS, in order to create a new model for the social security system focused on the specialization and integration of different activities and institutions. Under this system, the Instituto Nacional de Previdência Social (INPS) only kept the power to grant benefits, while INAMPS

1020-496: The federal intervention in Rio de Janeiro , which temporarily halted legislative processes, as the Constitution prohibits amendments during periods of federal intervention. On February 20, President Jair Bolsonaro presented a social security reform proposal to Congress, developed by the Ministry of Economy , headed by Paulo Guedes . A key aspect of the reform is the proposed shift from

1080-522: The promulgation of the Brazilian Constitution, the job stability for employees under the Consolidation of Labor Laws (CLT) was extinguished, and only those who had worked for 10 years in the same company remained stable. From that point on, all workers with permanent employment contracts were obliged to opt for the FGTS. Among the most common criticisms of the fund is the fact that its yield

1140-798: The CAPs operated on a capitalization basis, their structural weaknesses included a limited number of contributors, questionable demographic assumptions, and frequent instances of fraud in benefit claims. In 1930, President Getúlio Vargas suspended CAP pensions for six months and initiated a restructuring that replaced the CAPs with the Institutos de Aposentadoria e Pensões (Retirement and Pension Institutes - IAPs), which were national authorities under federal government control. The new system organized affiliations by professional categories rather than by individual companies. Subsequent institutes established under this system included: The 1934 Constitution established

1200-616: The CLPS. Law 8.212/1991 established the Plano de Custeio (Funding Plan). Social assistance is now regulated by Law 8.742/1993, known as the Organic Law on Social Assistance - LOAS. In 1998, the federal government implemented changes to the social security system through Proposed Amendment to the Constitution (PEC) No. 20. This amendment introduced a minimum retirement age: 55 years for women and 60 years for men. Prior to this change, retirement eligibility

1260-509: The Caixa Econômica Federal. The CRF is required to withdraw from inactive accounts, to prove the non-existence of an employment relationship, and to prove that a certain taxpayer has no pending issues related to the benefit. It serves to attest that a company is up to date with its employees' payments and also with Social Security . The document is a mandatory requirement for companies that participate in biddings , close contracts with

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1320-452: The Constitution's enactment, the Brazilian social security system has predominantly utilized a distribution model. However, persistent issues related to system deficits have been noted over the years. Since 1988, there have been three proposed constitutional amendments aimed at reforming the pension system. According to the 2021 Global Retirement Index (GRI) by French investor Natixis , Brazil

1380-527: The Eloy Chaves Law of 1923, which created the Caixas de Aposentadorias e Pensões (Retirement and Pension Funds - CAPs) for railroad workers, financed by companies, employees and railroad fares. The law also allowed for the establishment of CAPs for other worker categories, such as dockers and seafarers (under Law No. 5.129/1926) and telegraph and radio-telegraph service employees (under Law No. 5.485/1928). Although

1440-417: The FGTS. With the new law a fund was created, supplied by the employers, through the deposit of 8% on the worker's remuneration, required throughout the term of the contract. Regardless of the employee's option, the employer had the obligation to deposit the FGTS value in a specific account, in the name of the worker as "not opting". The ten-year stability regime ceased to exist for workers in general as of

1500-566: The Fundo de Assistência ao Trabalhador Rural (Rural Workers Assistance Fund - FUNRURAL), which extended social security rights to rural workers. In 1974, the Empresa de Tecnologia e Informações da Previdência (Social Security Information and Technology Company - Dataprev) was founded. In 1977, the Sistema Nacional de Previdência e Assistência Social (National Welfare and Social Assistance System - SINPAS)

1560-566: The Organic Law of Social Security (LOPS), unified the social security legislation, streamlining the system. In 1964, a commission was established to reform the social security system, leading to the merger of all the IAPs into the Instituto Nacional do Seguro Social (National Social Security Institute - INPS). This transformation was formalized by Eloah Bosny through Article 1 of Decree-Law No. 72 of 1966. The Complementary Law 11/1971 introduced

1620-620: The Plano de Benefícios dos Órfãos e Viúvas dos Oficiais da Marinha (Benefit Plan for Orphans and Widows of Naval Officers) was established to provide protection for the dependents of naval officers in the event of their death. Subsequently, in 1808, the Mount of Piety of the Personal Guard of King John VI was created, followed by the establishment of the General Mount of Piety of State Employees in 1835. In 1821, Prince Pedro de Alcântara issued

1680-445: The amendment was enacted. PEC No. 40 aimed to establish new criteria for contributions and retirement pensions for civil servants in Brazil. Key provisions included: If these requirements were not met, pensions would be calculated based on the average salary received throughout their careers, resulting in a lower benefit compared to their final salary. PEC No. 40 faced controversy, particularly regarding its approval process, which

1740-452: The amount eligible for withdrawal has been exercised. The conclusion of economist Cecilia Machado is that the worker does not want to keep his money in the FGTS account: "It is not known whether the withdrawal occurs because this is a savings that the worker would not like to do or if the withdrawals are justified by the low rate of return of the FGTS. (...) [But the FGTS] is an imposing instrument of

1800-429: The beginning of each month and in the name of the employees, the amount corresponding to 8% of each employee's gross salary. For employment contracts signed under the terms of law 11.180/05 (Apprenticeship Contract), the percentage is reduced to 2%, and finally, in the case of domestic workers , the collection corresponds to 11.2%, being 8% as a monthly deposit and 3.2% as an anticipation of the rescissory collection. It

1860-477: The beneficiary's CPF being registered and 1.2 million were provided to people with abbreviated names, which could facilitate fraud. There are 31,285 cases of the same CPF receiving three or more pensions and 1,827 benefits granted to people who have already died. There are also 3,700 benefits paid in excess of the legal limit, although the TCU recognizes that there are some specific laws, such as for ex-combatants, in which it

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1920-558: The benefit is proof of a per capita family income of less than or equal to 1/4 of the minimum wage per person. This benefit is funded by Social Assistance, not Social Security, so it is not a contributory benefit, although it is administered by the Ministry of Social Security . An audit carried out by the Federal Court of Accounts (TCU), published in October 2009, raised suspicions about 3.2 million benefits; 2 million were granted without

1980-419: The company's net profit. The funds collected from these social contributions are earmarked exclusively for social security and cannot be diverted for other uses. However, it is important to note that while these contributions support health and social assistance, the primary funding for social security itself comes from the deductions made from salaries and payrolls of companies and the government. According to

2040-447: The completion of the ten-year period or did not receive a severance pay they were entitled to, and were forced to claim their rights in court. The Decennial Stability was considered an onerous burden for the companies, since, according to entrepreneurs , it didn't add value to society as a whole. As the years went by, the government also verified that the stability regime didn't favor the employees, since companies sometimes didn't allow

2100-447: The contribution to the INSS becomes 5% of the minimum wage. Compulsory insured workers are all those listed in article 11 of Law 8.213/1991. Optional insured persons are those listed in article 11 of Decree 3.048/1999. They must be over 16 years of age and join the General Social Security System, by contributing, as long as they are not exercising a remunerated activity that qualifies them as

2160-405: The current distribution system to a capitalization system. In the distribution system, workers who contribute to the social security system are actually paying for the retirement of those who are already retired. In the capitalization system, each worker will be responsible for contributing to their own pension, in a way, like a savings account, which would be managed by public and private entities of

2220-439: The current table of INSS deductions from salary is: There are different contribution rates for Individual Contributors. In that case, the highest amount is 20% of the desired contribution salary, where the minimum cannot be less than the salary cap and the maximum is the social security cap, which in 2019 was R$ 5.839,45. For those who wish to contribute the minimum wage and give up the option of retiring by contribution time, there

2280-678: The effectiveness of the Federal Constitution . For this reason, Law 5.107 was revoked by law 7.839, of 1989, which also established rules for employees who, at the time of the effectiveness of the Constitution , were not opting for the FGTS system. Law 7.839/89 was later revoked by law 8.036/90, which currently regulates the FGTS system. The FGTS resources were, and are, remunerated with low interest rates and monetary correction , and were originally used to finance investments in housing and infrastructure , especially sanitation . With

2340-470: The false issuance of hospital admissions and non-existent appointments. Since 1988, the SUS has been responsible for public health care, based on article 198 of the Federal Constitution , which states that health is a universal right. INAMPS was abolished in 1993 by Law No. 8.689, and its powers were distributed among the federal, state and municipal SUS management bodies. Part of the contributions are deducted from

2400-429: The federal government, states, Federal District and municipalities, and Regime Geral de Previdência Social (General Social Security System - RGPS), which covers other workers, including those in the private sector. Participation in these public welfare systems is mandatory for all citizens who are employed. In addition to the public schemes, Brazil also offers private or complementary social security options. In 1795,

2460-517: The government is studying to allow the use of FGTS to pay debts. The measure was not well received by Proteste , the largest consumer organization in Latin America , since it could further complicate the situation of consumers, especially those who are already in debt . In 2017 President Michel Temer signed a decree allowing withdrawals of the FGTS, but only from inactive accounts. According to information from Caixa Econômica Federal , 88% of

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2520-493: The government, which cannot be chosen by the worker, constituting a mechanism of financial repression." The Negative Certificate attests to the regular situation of employers in relation to the collection of the Length-of-Service Guarantee Fund. The Negative Certificate is only granted to a company when it is up to date with all its labor obligations . The Regularity Certificate (CRF) is a document issued by

2580-516: The guarantee of stability, this indemnity had its value doubled. In order to cover this indemnity, some companies, on their own account, accrued about 1/12th of the value of the worker's salary in order to have the necessary amount to cover this cost in case it was necessary to fire the worker. Many companies understood that even if they accrued some amount, the indemnity would still be extremely high. For this reason, not all employers were prepared. Thus, in practice, many workers were fired shortly before

2640-535: The law that regulates it, the Organic Law on Social Assistance ), or BPC ( Continuous Benefit ). It is paid to people who cannot afford to contribute to the Social Security system. Elderly people aged 65 and over who are not in paid work and without any other pensioners in the family, and disabled people who are unable to work and live independently are entitled to social assistance. One of the criteria for obtaining

2700-426: The next generation of workers. This system has faced challenges due to demographic shifts, particularly the significant increase in the elderly population. The imbalance between contributions and benefits has led to claims of a deficit in the social security system, which has necessitated the reallocation of resources from other areas, such as health and social assistance, to cover the shortfall. As life expectancy rises,

2760-630: The number of inactive individuals is growing at a faster rate than the number of active workers. This demographic imbalance has prompted calls for reform to address the fiscal challenges faced by the government. The high costs of social security have contributed to inflation and low economic growth, prompting the need for reforms. Over the past 30 years, Brazil has undergone three major social security reforms. The Brazilian social security system consists of two main public schemes: Regimes Próprios de Previdência Social (Social Security Schemes - RPPS), which are aimed at permanent civil servants and are set up by

2820-425: The payroll before the employee receives their full salary. However, there is a maximum limit for INSS deductions and the discount percentages depend on each person's salary. When the employee's salary is higher than the maximum contribution limit, it is only allowed to deduct an established amount, called the cap. Even if the worker earns more, they cannot contribute more. Social security laws change quite frequently, so

2880-514: The proposal is enacted. Fundo de Garantia do Tempo de Servi%C3%A7o Fundo de Garantia do Tempo de Serviço ( FGTS ) (English: Length-of-Service Guarantee Fund ) is a fund created in order to protect workers in Brazil dismissed without just cause . By opening an account linked to the employment contract , employers deposit in accounts opened at the Caixa Econômica Federal , at

2940-738: The remuneration paid each month to their employees (with an employment contract) and to payments made to independent contractors. From this 20%, companies deduct between 8% and 11% from the worker's pay. Civil servants contribute between 11% and 14% of their salary, with the government matching this percentage as the employer. Additionally, companies contribute to other areas of the social welfare program, such as health and social assistance, through social contributions. These include: Contribuição para Financiamento da Seguridade Social (COFINS), proportional to gross revenue; Programa de Integração Social (PIS), proportional to company revenue; and Contribuição Social sobre o Lucro Líquido (CSLL), proportional to

3000-676: The serious misconduct through an investigation to verify the accusation. If the employee asked to be terminated , the request would only be valid when made with the assistance of the Union , the Labor Ministry , or the Labor Court . In this stability system, employees with more than a year of service and who were dismissed before completing the ten-year period were entitled to an indemnity corresponding to one month's salary for each year worked . After 10 years of service, in order to give substance to

3060-496: The social benefits, specialists point out that the INSS is in deficit. On June 17, 2015, then-president Dilma Rousseff signed the Law 13.135, which established adjustment measures to reduce costs. The Instituto Nacional de Assistência Médica da Previdência Social (English: National Institute of Social Security Medical Assistance), or INAMPS, was a federal agency created in 1977 and abolished in 1993. Also in 1977, Law No. 6.439 established

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3120-471: The worker to fulfill the necessary ten years. The solution found was to adopt the regime of the Length-of-Service Guarantee Fund (FGTS), instituted via Law No. 5.107. The new regime, which did not do away with the previous system, was an alternative to the ten-year stability regime. Employees could opt for the new regime or remain in the previous one. To do so, employers had to mention in the employee's Employment Record Card whether or not they were opting for

3180-624: The worker's choice. Paulo Guedes has mirrored the Chilean pension model, in which the money is managed by private companies which, in turn, can invest in the financial market. The social security reform proposal was filed in the Chamber of Deputies as PEC 6/2019, approved in April of the same year in the Comissão de Constituição e Justiça e de Cidadania ( Constitution and Justice and Citizenship Committee - CCJ). In

3240-475: Was based solely on the number of contribution years—25 to 30 years for women and 30 to 35 years for men—without any age requirement. PEC No. 20 also established the Fator Previdenciário (Social Security Factor) through Law No. 9.876/99. This factor adjusted the provisions of Laws No. 8.212/91 and No. 8.213/91, and introduced a transition rule for individuals who were already contributing to the system before

3300-462: Was created during the military dictatorship by a law promulgated on September 13, 1966, by the then President Castelo Branco . At the time, with Octávio Gouveia de Bulhões in the Ministry of Finance and Roberto Campos in charge of Planning , the creation of the FGTS was part of the institutional reforms and economic adjustment prepared by the holders of the portfolios after Institutional Act 1. It

3360-539: Was established by Decree No. 99,350 on June 27, 1990. This establishment resulted from the merger of the Instituto de Administração Financeira da Previdência e Assistência Social (IAPAS), founded in 1977, and the Instituto Nacional de Previdência Social (INPS), created in 1966. The Brazilian social security system is an integral component of the country's social welfare program. It is primarily funded through contributions from companies, which are required to contribute 20% of

3420-476: Was established. SINPAS comprised the following entities: The LOPS was replaced by the Consolidation of Social Security Laws (CLPS) in 1976. The 1988 Brazilian Constitution established a comprehensive social security system, encompassing health, welfare, and social assistance. This system covers various benefits, including pensions, sickness benefits, child allowances, maternity pay, and prison allowances, and

3480-454: Was ranked 43rd out of 44 countries assessed. In 1990, SINPAS was abolished. Law 8.029/1990 created the Instituto Nacional do Seguro Social (INSS), incorporating INPS and IAPAS. INAMPS, which operated alongside INPS, was abolished and its services began to be covered by SUS. Law 8.213/1991 established the Planos de Benefícios da Previdência Social (Social Security Benefit Plans - PBPC), repealing

3540-462: Was responsible for providing medical assistance to insured people and the Instituto de Administração Financeira da Previdência e Assistência Social (IAPAS) was responsible for financial management. At the beginning of 1985, the Federal Police exposed INAMPS' fraudulent scheme with around 30 hospitals out of the 179 affiliated, revealing a shortfall of around Cr$ 1.5 trillion. The fraud included

3600-584: Was scrutinized in connection with the mensalão scandal . This scandal raised questions about whether the approval of the PEC was influenced by bribes received by parliamentarians involved in the scandal. At the end of 2016, the government of Michel Temer proposed a significant reform to the social security system, filed as PEC No. 287/2016 in the National Congress. This proposal aimed to address changes in retirement rules in response to increasing life expectancy and

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