Brazil Reveals Plan For Austere Pension Overhaul

Brazilian President Michel Temer on Monday will reveal details of his plan to overhaul the country’s retirement benefits system, according to Reuters.

The plan, which is likely to be controversial among citizens and lawmakers, calls for raising the retirement age, higher contributions from workers, and lower benefits.

From Reuters:

The pension reform, which had been promised by Temer since he became president in May, faces fierce opposition from powerful labor and civil servant unions that threaten to organize street demonstrations to block the changes.

Despite such threats, the government plans to send the reform plan on Tuesday to Congress where is expected to face a heated debate that could last several months.

“It will face a lot of resistance, but I believe Congress is well aware of the fiscal dilemma and social security is at the heart of the problem,” said deputy Reinhold Stephanes, a former pensions minister who may have the task of reporting to the lower house on the reform plan.

“We have to be in line with the pension standards of the rest of the world by having a minimum age of retirement of 65 years of age,” he told Reuters.

Expenditures from social security make up about 40 percent of the government’s primary spending, or spending before debt payments. It is considered the main threat to the country’s finances in the future.