February 7, 2018 – Fort Russ News – Paul Antonopoulos – Translated from Nova Resistencia.
RIO DE JANEIRO, Brazil – Although it dates back to the creation of the National Institute of Social Security (INPS) in 1966, which merged into a single state body several Pension and Retirement Institutes (IAPs) of different professions that had been instituted since the Vargas Era, our current pension system is based on the Constitution of 1988, with its Article 194 laying the foundations of Social Security, and Article 195, stating that its financing will focus on employers, workers, and net income from lottery games, sweepstakes and betting administered by Caixa Econômica Federal (according to Article 26 of Law 8212/91). In 2003, it also focused on importers.
Social Security is divided into three fronts: Public Health is intended to serve all Brazilians, regardless of income. The Social Assistance aims to serve disadvantaged people in general, and Social Security to workers when they are no longer able to work.
Since then, the system has gone through three updates.
In 1998, the FHC Government, through Proposed Constitutional Amendment No. 20, established minimum retirement ages (previously, it counted only the contribution time) and the Social Security Factor, which establishes a calculation involving the time of contribution and the age to discourage retirements and keep more active workers for longer.
In 2003, the Lula government, the PEC 40 affected only civil servants, who, like the previous one, established a specialized calculation that imposed additional restrictions on the retirement of state employees, making wage completeness more flexible in retirement, in addition to having instituted a contribution even for those already retired. This reform, it seems, only had approval possible thanks to the payment of monthly fees.
The Dilma Government introduced Law 13,183 in 2015, the main emphasis of which is Rule 85/95, which adds up to the contribution time with the age, dispensing in many cases the much criticized Social Security Factor.
All these changes have had their share of resistance and protests, but it is undeniable that the current proposal of the Temer Government has received much more resistance and criticism. And that explains why it is so much more drastic and invasive than all previous reforms combined! And in reality, it will lead not to a real reform, but practically to a dismantling of the social security system.
DEFICIT IN THE PENSION?
There is a social security problem to be solved, which is derived from two facts that have reached the great majority of similar systems in other countries: the aging of the population and the reduction of fertility rates.
Contrary to what many people think, Social Security is not a savings, where the contribution made throughout life is returned. Simple calculations show that such a scheme would be unfeasible, except for very short lives and precarious pensions. As far as workers are concerned, and not counting the other two items of Social Security, in fact, the system more closely resembles a pyramid, where active workers support the inactive, and thus will be more onerous the more inactive they exist, and will have less funding and fewer assets contribute. With the average life increasing and the birth rate declining, the strategy of increasing the contribution of the workers has basically been used. But as you see in the 1988 CF itself, workers are not the only source of resources.
In addition to the aforementioned direct forms of financing, of which the impact on employers affects, among others, the companies’ net income, we also have the indirect forms, which can come from a myriad of ways of taxation. Article 154 of CF 88 guarantees the government autonomy to create new ways to pay for Social Security, and therefore, at any time, new taxes and fees can be added, or even resources can be moved from one area to another as needed.
The CPMF (Provisional Contribution on Financial Transactions), for example, was created in 1993 and used until 1994 by the Itamar Franco Government, then reinstituted by FHC in 1996. It was exclusively intended to fund Social Security and was able to collect a large contribution that affected income of the wealthiest strata of the population. Its revocation, in 2007, by the Congress, with an entirely political opposition, is one of the reasons for the need to consider other forms of funding.
Even so, various sources, including an ICC in the Federal Senate, have argued that welfare is actually a surplus, and the Temer government has even been judicially punished for having misrepresented it by falsifying reality. However, it has to be considered that discussing whether there is a deficit or not is in fact little relevant as it depends on which funding sources are included and how they are handled, as well as how money is spent.
That’s where the problem lies.
The Temer Government has been terribly generous with the forgiveness of debts from large corporations and banks, most of which are essentially social security, such as the PIS (Social Integration Program) and COFINS (Contribution for Social Security Financing), damaging then one of the forms of costing provided in the FC and regulated by complementary laws. There were at least 545 Billion in the form of exemptions, which would be enough to pay Social Security for years, if not all Social Security!
We also have the case of the controversial Unbundling of Union Revenue (DRU), a mechanism that allows up to 30% of the Social Security budget to be used in other areas, especially for the payment of interest on the Public Debt.
But it can be argued that not forgiving the debts of these companies could lead to difficulties, some even to bankruptcy, with increased unemployment and an even bigger budget crisis. The government also argues that the DRU only temporarily removes Social Security funds, which are subsequently returned from the Fiscal Budget, using even resources from the National Treasury: which curiously implies more indebtedness, which later, thanks to interest rates, become a still greater in Public Debt.
But all this only shows that the question is not whether there is a deficit or not in the Welfare, or if it is merely a matter of forgiveness or debt collection. The fact is that money has to come from one place and go to another, and as long as resources continue to be used for the insatiable appetite for Debt, which keeps growing, there is hardly a way to avoid a break in some part of the budget.
As always, all the country’s financial problems can always be reduced to the issue of PUBLIC DEBT INTEREST RATES, whose audit, also foreseen in the CF, has been neglected for almost 30 years, while palliative and temporary patches are being carried out and more. plus the bill overwhelms the overwhelming majority of the population in favor of very few Debt lenders.
THE PURPOSE IS PRIVATIZATION:
Account fraud, debt forgiveness, legal challenges, brutal unpopularity, and lack of congressional support make it seem that the current reform bill does not make sense, as there would still be other ways to curb the growth of the deficit, whether in the deficit pension or in the fiscal budget, even if it were with one more increase in the tax burden that will certainly come.
But it is perfectly clear if we understand that the proposal of the Temer Government reform is nothing more than part of its neoliberal program of total privatization of the Brazilian state. Many workers are already relying on alternative pension funds in the private sector, and with Social Security calling for ever-increasing contributions to declining returns, the trend is for more people to resort to private pension plans.
With the approval or not of this reform, it is almost certain that sooner or later, optionality will be proposed between public and private pensions, so that the worker, as it happens in several countries, remains bound to have a pension plan, but which can be done entirely in the private sector. Until finally public pensions are extinguished.
And what would be the purpose of this?
THE PREVENTION OF FINANCIAL SPECULATION:
Although there are not yet 500 private pension funds in Brazil, which do not serve even 10 million Brazilians, they must already move close to One Trillion Reais. With the population progressively aging, the tendency is to increase, and the government’s goal is to expose this amount to banks and large financial institutions, promoting a forced social security migration of workers from the public to the private sphere.
In this private sphere, this money is not only saved to be returned corrected at the end of the worker’s life, but is used for investments and financial speculation. Pension funds have been used to lend money to privatizations of public companies, to invest in the future derivatives market or to purchase Treasury Direct securities. This is great for big capital because it maximizes the amount of resources in the speculative ciranda to the joy of mega investors, putting at risk the pensions of millions of workers who may well be lost in disastrous investments by fluctuations in the volatile financial market, including bursts of speculative bubbles, but which are always profitable for the global financial elite, who always escapes unscathed and benefited from the economic disasters that their irresponsibility causes.
The purpose of the Pension Reform is nothing more than to deliver much more money into the hands of the rentier sector, controlled by a wealthy elite of bankers and capitalists, who are not content to parasitize production, monopolize the financial market, and rob public coffers now advance to take even the social security of workers caring little if they will have their retirement and assistance guaranteed.
Privatization of Social Security aims to wring out retirement money to further increase Insana Ciranda’s Financial Speculation.