INSS: reduction of payroll interest will be discussed – 03/10/2023 – Market

The reduction of interest on payroll loans from the INSS (National Social Security Institute) should be discussed by the Ministry of Social Security at a meeting of the CNPS (National Social Security Council) next Monday (13).

The council brings together government representatives, retirees, workers and employers. The drop in rates has been defended by the Minister of Social Security, Carlos Lupi. For him, because it is a credit with low risk of default, it would be possible to reduce the level charged.

Payroll credit is a loan deducted directly from the payroll of INSS retirees and pensioners, with rules defined by the Social Security Council. There are two types, personal loan and payroll credit card. Interest is limited to 2.14% per month for the personal loan and 3.06% per month for the card.

The insured can commit up to 45% of the benefit, 35% with a personal loan, 5% with a credit card and 5% with a benefit card, created last year. The loan can be repaid in up to 84 months, which is seven years.

Social Security claims the decision to reduce will depend on articulation at the CNPS, but says that, as the minister has been stating, “the current interest rates are high for the risks contained in the payroll-deductible modality, since there is a guarantee of payment deducted from the payroll of the recipient”.

Currently, there are around 17 million benefits with active payroll loan contracts, according to Social Security.

Força Sindical, which has a representative in the council, affirms that it will demand “a drastic reduction of the rates” in the meeting. The central understands the updated rate is “prohibitive”, and would be a “true extortion”.

The central’s calculations are that, in the year, the payroll rates exceed the current percentage of the Selic (basic interest rate of the economy), which is at 13.75% and has been a reason for a clash between the president of the Central Bank, Roberto Campos Neto, and the President of the Republic, Luiz Inácio Lula da Silva.

The maximum percentage per year charged from retirees reaches 29.93%, in the case of the payroll 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.

INSS payroll loan interest rates are currently the lowest available in the credit market. Lawyer Tonia Galleti, coordinator of the legal department at Sindnapi (National Union of Retirees, Pensioners and the Elderly), points out that, for this reason, the subject must be well studied so that there is no decrease in the offer of credit to retirees, making seek other options, getting even more indebted.

“The entities are in favor of lowering interest rates to benefit retirees and pensioners, but we want to discuss this to understand on what bases this will be done so that the offer of credit for this population does not decrease. So that they do not go into debt getting personal credit or even loan sharking”, he says.

Febraban (Brazilian Federation of Banks) says that the topic is being evaluated and debated by the sector together with the Ministry of Social Security and the INSS, according to a note previously sent.

Default is record, with an average debt of R$ 4,600 per person

Data from Serasa Experian indicate that defaults in the country are record. The volume of debtors jumped from 59.3 million in January 2018 to 70.1 million people in January 2023, according to the company.

In addition, the average amount of debt reached the highest level of the last five years, R$ 4,612.30 for each person, on average, in January of this year, which represents a 19% growth in relation to January 2018, when the value was R$ 3,926.40.

According to Luiz Rabi, chief economist at Serasa Experian, high interest rates and inflation in 2022 contributed to the record. “Inflation and high interest rates are the main economic factors behind this scenario”, he says.

The population’s indebtedness is a concern of the government and of credit companies, such as Serasa, which makes constant fairs to clear citizens’ names. Banks also have a sale open until the end of March.

At the government level, the launch of the Desenrola program is expected, which should focus on negotiating the debts of families with incomes of up to R$ 2,600 per month.