INSS payroll: understand what can be decided today – 03/28/2023 – Market

The impasse on the limit of the interest rate of the payroll loan of the INSS (National Institute of Social Security) can be resolved this Tuesday with the meeting of the CNPS (National Council of Social Security), in Brasília.

At the meeting, members of the federal government and representatives of banks and retirees should discuss studies and seek agreement on a new index.

At the last meeting, on March 13, the CNPS reduced the interest on payroll loans from 2.14% to 1.7% and from 3.06% to 2.62% on credit cards and benefit cards. Three days after this resolution, part of the banks suspended the payroll for disagreeing with the reduction.

The government will take its position at a meeting this Tuesday between President Luiz Inácio Lula da Silva and members of the Civil House and the Ministries of Finance and Social Security. The meeting should take place shortly before the CNPS meeting. Last week, the Chief Minister of the Civil House, Rui Costa, stated that the limit should be slightly below 2%.

A Sheet found that the banking sector should not give up an interest rate ceiling close to 2%. Banks accept fees of up to 1.99%. Retirees say they accept a maximum of 1.9%. “If there is any proposal above 1.9%, we will refuse”, explains João Inocentini, president of Sindnapi (National Union of Retired Persons).

The union representatives affirm that they were passed over in the negotiations of the last 15 days, but they believe in an agreement this Tuesday. “We’re not just going to stamp a decision. We’re going to take a stand and defend the limit of 1.9%. We believe in an agreement, because it’s important for everyone to end this discussion”, says Tonia Galleti, representative of Sindnapi at the CNPS .

Over the past two weeks, government officials have held several meetings to reach consensus. On Friday (24), there was a meeting between Febraban (Brazilian Federation of Banks) and the working group coordinated by the Ministry of Finance. According to the banking institution, the “proposals from both sides are now closer”.

With the proposals from each side, the board will seek an agreement on the ceiling of payroll interest. The CNPS brings together 15 members, six from the government, three from retirees and pensioners, three from active workers and three from employers.

In addition to defining the interest rate, the council must also deliberate on the unions’ proposal to create a working group that would meet every 60 days to discuss the INSS payroll.

How much should payroll interest go to?

There is an impasse between representatives of retirees, who want maximum interest of 1.9%, and banks, who ask for a rate between 2% and 2.01%, but have already stated that they accept a percentage of 1.99%. The impasse must be defined by President Lula.

According to the banks, it is not possible to operate credit at a lower rate. However, retirees point out that Caixa already operated interest rates of around 1.8% and Banco do Brasil would accept a rate of up to 1.85%. In addition, in the pandemic, interest rates dropped to 1.80% and there was no loan cancellation, as banks are doing now.

Why did banks suspend payroll loans?

The suspension was a joint move by at least ten banks that decided to stop offering the loan after the drop in interest rates defined by the CNPS. According to them, the rate is too low, making the operation unfeasible. Among the banks that stopped offering payroll on a temporary basis are:

1. Caixa Econômica Federal
2. Bank of Brazil
3. Itaú Unibanco
4. Bradesco
5. Mercantil (only the personal loan was suspended, the payroll card is still valid)
6. PAN
7. Well Promoter
8. Daycoval
9. PagBank (suspended only in banking correspondents, continues offering through the app)
10. C6

When will the new fees go into effect?

In general, the payroll loan rates can only be applied after the publication of a normative instruction by the Ministry of Social Security and the INSS, which is published in the Official Gazette only after the decision taken by the CNPS.

According to the Social Security, the publication of the measure can be made immediately, in an extra edition of the Official Gazette, if a consensus is reached at the CNPS and the body defines the new interest rates.

Will the banks offer payroll again?

According to Febraban, if the new interest rate is viable, the credit line, which has more than 14 million contracts in progress, will resume operation. However, most of them claim that, before resuming the line, they need technical feasibility studies of the payroll, depending on the interest rate.

How does the INSS payroll loan work?

Payroll is a credit that is directly deducted from the payroll. Interest is controlled by the CNPS. In the INSS payroll, the insured can commit up to 45% of the benefit with the payroll loan. Of this total, 35% are for the personal loan, 5% for the credit card and 5% for the benefit card, created last year.

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

Why did interest rates drop?

The drop in interest rates was a claim of retirees. At the beginning of the month, Força Sindical came to defend “a drastic reduction of the rates”, classifying the charge in force as “prohibitive” and “true extortion”. However, the level of 1.7% was presented by the Ministry of Social Security, without extensive discussion about the percentage.

Before the meeting, the central presented calculations showing that the annual interest of the payroll exceeds the Selic (basic interest rate of the economy), which is at 13.75%.

The maximum percentage per year charged from retirees on payroll reaches 29.93%, in the case of the loan, and 43.58%, in the case of the credit card. During the pandemic, rates were reduced, the loan reached a monthly level of 1.80% in March 2020, which lasted until the end of 2021.