INSS: payroll interest drops from 1.91% to 1.84% – 10/11/2023 – Market

The CNPS (National Social Security Council) approved a further drop in the interest rate on INSS (National Social Security Institute) payroll loans from 1.91% to 1.84% per month at a meeting held this Wednesday (6) .

The new rate, approved by 14 votes to 1, will come into effect as soon as the Ministry of Social Security publishes regulations containing the measure. The only vote against was from bank representatives. The previous reduction had been defined on August 17th.

This is the fourth change in payroll interest rates this year and is linked to the drop in the economy’s basic interest rate, the Selic, which fell 0.5 percentage points in September, to 12.75% per year.

The new level will apply to payroll-deductible personal loans. There was also a reduction in credit cards and benefit cards, from 2.83% to 2.73%.

The reduction of interest rates with each fall in the Selic has been defended by the Minister of Social Security, Carlos Lupi, but there is no consensus within the CNPS itself. The minister even proposed an automatic trigger, which was not approved at a previous meeting of the body.

In the opinion of the president of Sindnapi (National Union of Retirees, Pensioners and Elderly People), Milton Cavalo, the CNPS decision is important for the category.

“I understand that the consignment granted to retirees and pensioners does not represent any risk to financial institutions and, therefore, I see no reason to have such a high interest rate. Therefore, I defend the technical analysis of the board members so that there is a definition of an interest rate consistent with the market moment”, he states.

The payroll loan is a loan that has a direct discount on retirement or pension. Interest is capped by Social Security, which means the bank can charge less, not more.

Since September, following a decision by the STF (Supreme Federal Court), beneficiaries of the BPC (Continuous Payment Benefit) can also contract the consignment.

Interest drop in March led to a tussle with banks

The drop in interest rates in March this year led the country’s largest banks to stop offering payroll loans, in a struggle with the Minister of Social Security. The reduction in rates to 1.70% and 2.62%, at the time, had been approved by the CNPS following a suggestion from the ministry.

The level was considered low by the banks and the loan was only offered again after President Luiz Inácio Lula da Silva (PT) interceded for an increase. Rates then rose to 1.97% and 2.89%.

UNDERSTAND INSS CONSIGNED CREDIT

The consigned loan is a credit controlled by Social Security. Under current rules, the INSS insured can commit up to 45% of the benefit to the payroll loan. Of this total, 35% goes to the personal loan, 5% to the credit card and 5% to the benefit card, created in 2022.

The loan can be repaid in up to 84 months (seven years). Interest is capped, which means the financial institution can charge less but not more than this rate.