Brazilian President Michel Temer details of his controversial pension overhaul plan earlier this week, and now further details are coming out about the expected savings the proposal would bring.
The overhaul would raise retirement ages and increase contribution required from workers — in effect, a significant cut in benefits for the country’s workers.
But the plan will bring billions in savings for the country over the next decade, to the tune of $200 billion.
Brazil’s government expects to reduce expenditures by about 687 billion reais ($200 billion) between 2018 and 2027 with proposed changes to its costly pension system, the government’s pension secretary said on Tuesday.
The proposal to overhaul Brazil’s pension system, seen by investors as the most important of President Michel Temer’s agenda to shore up the country’s public finances, would automatically adjust up the minimum age of retirement as the population’s life expectancy grows, pension secretary Marcelo Caetano said.
Other changes would include removing tax exemptions on revenues from exports and demand rural workers to start contributing to the pensions system, Caetano told journalists.
The controversial pension reform plan at the heart of Temer’s austerity drive aims to shore up an economy mired in its worst recession on record by bringing under control a widening budget deficit. Temer unveiled the reform on Monday by saying it was necessary to avoid a collapse in the pension system.