Brazil’s Senate is expected to consider extending pension reform to states and municipal governments as it moves to vote on a bill overhauling the social security system, lawmakers said on Thursday.
Senators could also take up a plan for individual retirement accounts, which Economy Minister Paulo Guedes had hoped to introduce but was dropped from the bill to ensure final passage in the lower house of Congress on Wednesday.
President Jair Bolsonaro celebrated the progress on his cornerstone economic proposal. Addressing reporters, he asked the Senate to pass the bill as is, saying follow-on proposals could be included in a “parallel” bill.
Guedes and his team want the Senate to reopen debate on privately-managed retirements accounts based on worker and employer contributions, an Economy Ministry official revealed. The so-called “capitalization” model, adopted in other countries such as Chile, could eventually replace the current pay-as-you-go state pensions system.
But the ministry source said any new items, including extending pension reform to state and municipal governments, would have to be proposed in separate legislation.
Any changes in the Senate to the current bill would require subsequent approval in the lower chamber, delaying a reform process economists consider an urgent priority to stabilize Brazil’s public finances and kickstart an economic recovery.
The government says the bill, which raises the minimum retirement age and reduces some workers’ benefits, will save the public purse 933 billion reais (US$ 237 billion) over a decade.
Fitch Ratings in a note to clients on Thursday said the pension reform bill will not be enough to stabilize Brazil’s public debt burden and additional reforms will be needed to boost growth in Latin America’s largest economy.
Senate leaders said a wider reform debate could occur so long as the present bill is not delayed.
Senate President Davi Alcolumbre said the chamber will not dodge discussion of pension reform for states and local governments. While individual accounts are “not in fashion,” the Senate would debate it if a lawmaker raises the issue, he said.
Senator Tasso Jereissati, a member of the center-right PSDB party who was charged with pushing the pension bill through committee, said the Senate was likely to approve it by the end of September with hardly any amendments.
“We’ll try to put any changes in a parallel bill,” he said.