INSS payroll: Farm studies alternatives – 03/16/2023 – Market

The reduction of the INSS (National Social Security Institute) payroll loan interest ceiling, from 2.14% to 1.7%, was the result of a dispute between Minister Carlos Lupi (Welfare) and the Planalto Palace, according to people heard by Sheet.

The measure also had no support from the Ministry of Finance, which is now studying alternatives.

According to reports from members of the government, the measure was even presented to President Luiz Inácio Lula da Silva (PT) in a meeting on the 8th.

According to these reports, the representative gave the approval for the proposal to begin to be processed internally and to hear the ministries involved, in particular the Treasury. The head of Social Security, Carlos Lupi, in turn, would have understood that he could keep the analysis of the topic at the meeting of the CNPS (National Council of Social Security) held on Monday (13).

Because of the episode, Planalto members also saw Lupi as one of the targets of Lula’s public scolding at the ministerial meeting on Tuesday (14), the day after the body’s decision.

The head of the Executive said, during the meeting whose beginning was broadcast on TV Brasil, that he does not want “proposals from ministers”, but from the government. In a tougher tone, without naming names, he asked that the holders of the folder who are authors of some “genius” present them so that they receive the proper processing within the government before making them public.

A claim by retirees, the reduction in INSS payroll interest had been publicly defended by Lupi. For him, it would be possible to reduce the level charged because it is a credit with low risk of default. In an interview at the end of February in Rio de Janeiro, he stated that he would take the matter up for discussion at the CNPS in March and described the then level of interest rates as “criminal”.

According to reports, Minister Fernando Haddad (Finance) even contacted the Social Security holder asking that the idea not be taken forward. Before the announcement of the measure, members of the economic ministry met with representatives of the financial sector, who defended the economic unfeasibility of the product at the meeting.

In the second, the National Social Security Council approved, by 12 votes to 3, the reduction of the payroll interest ceiling from 2.14% to 1.7% per month. The CNPS is composed of representatives of the Ministry of Social Security, the INSS, retirees, pensioners, workers and employers (industry, commerce and agriculture confederations).

The INSS payroll loan is a loan with a discount directly on the social security benefit.

After approval by the board, several banks suspended their lending operations in this modality. The list of institutions includes Bradesco, Itaú, Pan, Banco Mercantil do Brasil and C6 Bank.

In a note released this Thursday, Febraban (Brazilian Federation of Banks) said that each bank follows its own business strategy for granting (or not) the payroll credit line to INSS beneficiaries.

“The financial sector had already manifested itself with the Ministry of Social Security and the INSS, stating that, at this moment, considering the high funding costs, a possible reduction in the ceiling could further compromise the offer of payroll loans and payroll credit cards” , he stated.

According to the entity, the two INSS payroll credit lines — loan and card — have a balance of BRL 215 billion on loan. In all, 14.5 million retirees and pensioners with an average benefit of R$1,576.19 took out this type of credit. Of this total insured, 42% are people with a dirty name.

“Initiatives like these generate relevant distortions in the prices of financial products, producing effects contrary to what is desired, insofar as it tends to restrict the supply of cheaper credit, impacting economic activity, especially consumption,” he added.

Social Security, in turn, states that the 0.44% decrease in interest will cover more than 37 million citizens, including retirees and pensioners.