Government proposes to the STF that the FGTS correction will at least guarantee inflation

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The Supreme Court may resume, this Wednesday (4), the trial of an action that questions the fund’s current form of remuneration. Government says that a very high level could hinder social programs. The federal government proposed this Thursday (4) that the Federal Supreme Court (STF) set the IPCA, the official inflation index, as a reference for correcting deposits from the Severance Indemnity Fund (FGTS). The system would only be valid for deposits made after the Court’s decision. The Supreme Court may resume this afternoon the trial that discusses the correction of the FGTS. The Court analyzes an action by the Solidariedade party presented in 2014, which questions the current model for readjusting the amounts deposited in the fund. In today’s format, remuneration is based on the so-called Reference Rate (TR) – a type of interest rate created in the 1990s, which is used as a parameter for some financial applications. According to the rules in force, the FGTS has a yield equal to the value of the TR plus 3% per year. The TR is currently 0.32% per month, but the index can change, as it is made up of a series of variables. Savings currently have a return of 0.6% per month. Rapporteur’s vote STF discusses FGTS correction index Reporter of the action, the president of the STF, Luís Roberto Barroso, argues that the fund’s remuneration cannot be lower than that of the savings account, and suggested two rules: deposits that already exist: distribution of all FGTS profits by account holders – what the government currently does on its own initiative becomes mandatory; from 2025: new deposits will be remunerated at the savings correction rate. The minister’s vote was followed by Nunes Marques and André Mendonça. In November, minister Cristiano Zanin asked for more time to analyze the case and suspended the trial. Government proposal In the request sent this Thursday, the Attorney General’s Office (AGU) stated that a “higher remuneration would have the effect of benefiting accounts with larger balances, not promoting the social justice proposed by the Fund”. The Union proposes, for the future effects of the Supreme Court’s decision: remuneration of accounts linked in the legal form (Reference Rate (TR) + 3% per year + distribution of results obtained) in an amount that guarantees, at least, the official index of inflation (IPCA) in all years; In years in which the remuneration of accounts linked to the FGTS does not reach the IPCA, it will be up to the Fund’s Board of Trustees to determine the form of compensation. According to the AGU, it is necessary to “guarantee the dual function performed by the FGTS, which, in addition to protecting workers, appears as an instrument for financing projects of social interest”. “Thus, changing the form of remuneration of FGTS accounts at high levels would have the potential to drastically increase the cost of public financing, removing all advantages for financing operations of programs providing access to housing, basic sanitation and infrastructure “, wrote the Union’s attorney general, Jorge Messias. According to the AGU minister, “unreasonable increases in the account’s remuneration could impact, in addition to the public coffers, the change in the final interest rates for popular housing financing, in addition to reducing the discount provided for popular financing from Minha Casa Minha Vida, with significant negative impacts on reducing the Brazilian housing deficit (currently 5.6 million housing units)”. “And it is important to highlight that, from 1995 to 2023, the FGTS has already financed around 10 million housing units, and if the Fund did not play this role, the current rates could be three times higher”, he continues. The government also sent a letter to the Supreme Court from trade unions, addressed to the Ministry of Labor and the AGU, which classifies as “adequate” the proposal for the inflation correction index exclusively in terms of the future effects of the fund’s remuneration. The document was signed by CUT, Força Sindical, UGT and Central dos Sindicatos Brasileiros.

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