government talks about costs of up to R$480 billion

The Federal Supreme Court (STF) scheduled the resumption of the trial of the so-called “whole life review” for this Wednesday (28), amid widely differing estimates regarding the fiscal impact that the action could generate. The ministers will analyze an appeal by the Attorney General’s Office (AGU) against a ruling that allowed a group of retirees to recalculate the benefit based on old contributions to the National Social Security Institute (INSS).

While the Union estimates a cost of up to R$480 billion if the thesis is maintained, entities representing policyholders calculate values ​​between R$1.5 billion and R$5.5 billion. The final amount will depend on the time limit established by the Supreme Court for reviewing pensions, the inflation indicator used and the average life expectancy of the beneficiaries.

The divergence between the numbers also results from the attempt, on both sides, to sensitize the Court’s ministers. During the course of the process, the Union has already presented different projections, always revising the value upwards.

In 2019, a technical note presented by the Social Security Secretariat of the Ministry of Economy indicated a financial impact of R$46.4 billion over ten years, in addition to an operational cost of R$1.6 billion. The amount included retroactive payments for a period of up to five years.

In March 2022, however, the INSS released a technical note that estimated the cost to the Social Security coffers of the possible victory of retirees in the action at R$360 billion. The study was criticized by experts in social security law.

“I have rarely witnessed such a cunning maneuver in the manipulation of public opinion, which seeks to reverse votes against a process in which the local authority is a party”, wrote João Badari, from the Institute of Social Security, Labor and Tax Studies (Ieprev).

“The defendant adds to the process proof that the action does not apply to everyone, attests to the decadence for those who retired more than ten years ago, understands that it does not apply to those who retired after the Social Security reform and in this note taken to the president of the Republic he states that it will be applied to a number greater than all the benefits paid by the INSS”, he continued.

At the time, then-president Jair Bolsonaro (PL), informed of the technical note, told the press that “the review [da vida toda] It will break Brazil.” Experts following the process believe that the new estimate may have motivated the request for prominence presented by Minister Nunes Marques, who ended up referring the process to an in-person session and postponing its conclusion to December 2022.

A group of retirees entitled “Injured by the INSS Revision of Life” disputes the data and even sent a letter to the then president of the STF, Luiz Fux, arguing that the trial should not be taken to the physical plenary on the grounds that there would be interference of the Executive in the Judiciary.

Experts hired by the association calculated that the economic impact on the Union’s coffers would be R$2.7 billion to R$5.5 billion in federal Social Security spending, depending on the inflationary indicator.

The controversial technical note, which was not included in the file, is cited in the motions for clarification filed by the INSS through the AGU to the STF’s decision in favor of retirees. Despite this, no value is mentioned in the petition, which only states that “the review of all benefits granted and the payment of arrears, estimated at billions of reais, constitutes an excessive and disproportionate burden, damaging the general interests”.

In the 2024 Budget Guidelines Law (LDO), however, the government informs that the whole-life review has a fiscal risk of R$480 billion. The legal action is included in a table of risks classified as “probable”. The list was prepared by the National Treasury Secretariat, of the Ministry of Finance, based on data from the AGU.

The value considers a scenario in which all retirements and pensions would be adjusted for all eligible beneficiaries and includes retroactive and future payments, in addition to projecting an average life expectancy of another 15 years for each insured person.

The Brazilian Institute of Social Security Law (IBDP) estimates that the impact would be R$1.5 billion. To the newspaper “Valor Econômico”, Carlos Vinicius Ferreira, member of the entity’s scientific board, explains that between 2009 and 2019 – the period reached by the most recent decision – 2.5 million benefits were granted, but only a portion of this is subject to review.

In addition to the fact that most cases do not obtain a more favorable benefit after review, there are pensions that are subject to revisional statute of limitations – a ten-year period to make the request.

About two weeks ago, retiree Eduardo Corrêa, through lawyer Rosemira de Souza Lopes, requested to join the process for a study, in which he estimates the fiscal cost of the “whole life review” over ten years at R$4 billion.

“It is worth highlighting that the projection of the cost of the ‘whole life review’ in ten years has no reason to exist, and the only meaning it seems to us is that it is a method used to present some value of interest with greater magnitude and greater impact ”, he states.

Based on data from the National Council of Justice (CNJ), it points out that there are only 61,411 lawsuits filed across the country related to Theme 1,102 (“whole life review”). He also mentions that, due to the decline, there is a substantial decrease in both the number of retirees entitled to review and the average value of the benefit adjustment.

What is the “lifetime review” trial?

The trial scheduled for this Wednesday dates back to the entry into force of Law 9,876, of 1999, which changed the way pensions are calculated. Until then, the benefit was defined considering the last 36 contributions, that is, the average of the previous three years. The new legislation stipulated that contributions collected throughout life would be included in the account, excluding the smallest 20%.

For those who were already in the system before the law was sanctioned, however, a transition rule was created: the calculation would start from July 1, 1994, the date the Real Plan began. Some people, however, ended up harmed, due to their “inverted” salary history – that is, because they had contributed more to the INSS in the period prior to July 1994 and had these contributions disregarded.

After a series of postponements, by 6 votes to 5, the STF decided, on December 1, 2022, to recognize the possibility of this group of insured people using the definitive rule, which considers the entire history of Social Security contributions – hence the name “life review”. The winning thesis endorsed a 2019 decision by the Superior Court of Justice (STJ).

The ruling was only published on April 13, 2023. On May 5, representing the INSS, the AGU filed the motion for clarification, arguing that it was not defined whether the revisions would be subject to limitation periods and statutes of limitations, nor whether the thesis reaches retroactive payments made under other parameters or final and unappealable decisions that had denied the right to recalculation.

The AGU argues in the process that the effects of the decision should only be applied to the future, excluding the possibility of reviewing already extinguished benefits, installments already paid and therefore prohibiting the payment of differences prior to April 13, 2023.

Furthermore, the Union says in the appeal that there would not have been a majority among the ministers of the STJ at the time of the judgment in that instance, since the decision was taken by a panel of the court, and not by the full panel. Therefore, he requests that the STF’s decision be annulled and the case be returned to the previous court for a new trial.

Four ministers voted to modulate the decision; three want the action to return to the STJ

To date, seven ministers have already given their votes in relation to the AGU appeal. Alexandre de Moraes, rapporteur of the case, defends the establishment of a time frame, from December 1, 2022, before which the recalculation of pensions should not be retroactive.

Before retiring, the then minister Rosa Weber disagreed with the rapporteur and argued that the effects of the decision should be set on December 17, 2019, when the STJ recognized the right to review one’s entire life. Edson Fachin and Cármen Lúcia followed this understanding.

Cristiano Zanin pointed out that modulation is necessary, but accepted the argument that the case should return to the STJ to be judged again. Ministers Luís Roberto Barroso, president of the STF, and Dias Toffoli followed Zanin’s understanding.

In July, Moraes responded to a request from the INSS and suspended the processing of all processes that deal with the review of the entire life until the embargoes for declaration are analyzed.

With the judgment of the appeal going to the physical plenary, the ministers will have to speak out again, with the possibility of changing the position of those who have already voted. Only Rosa Weber’s vote will be preserved. She retired in September 2023 and was replaced by Flávio Dino.