Brazil vetoes pension hike and offers rule to limit benefits

miércoles 17 de junio de 2015 19:59 GYT
 

BRASILIA, June 17 (Reuters) - Brazilian President Dilma Rousseff on Wednesday vetoed an increase in pension benefits approved by Congress and instead offered a new scheme to limit expenditures for social security in coming years.

In a statement released on Wednesday, the government said Rousseff will issue a temporary decree with an alternative pension formula that "will guarantee the sustainability of the pension system."

The announcement confirmed a Reuters report published on Tuesday citing sources.

The government had said the formula approved by Congress to relax the retirement age threatened the health of the fiscal accounts with an extra 3.2 trillion reais in expenditures over the next 45 years.

Rousseff's decision will likely raise tensions with union bosses and ally lawmakers who have threatened to override the veto on the pension changes.

In a surprise vote last month, Congress approved the so-called 85/95 formula in which women can receive full pension benefits if the sum of their age and years of pension payments reach 85. The same goes for men if the sum reaches 95.

The government said the alternative formula will take into account the population's increasing life expectancy by starting at 85/95, but gradually raising that sum over time to limit the flexibility of the minimum retirement age.

(Reporting by Maria Carolina Marcello and Alonso Soto; Editing by Diane Craft)