The SC government submitted a Bill to Alesc (Legislative Assembly of Santa Catarina) with an unprecedented strategy to alleviate the contribution burden on public servants and, at the same time, resolve the pension deficit.
“Our challenge is to create a situation to solve the deficit in the medium and long term, which is why we propose the creation of mass segregation”, stated the President of IPREV, Vânio Boing.
The proposal was developed by the government in partnership with IPREV (Santa Catarina Social Security Institute) and covers the State’s permanent public servants who participate in the RPPS (Social Security Regime).
President of IPREV, Vânio Boing – Photo: IPREV
Segregation of policyholders
The project’s strategy is to segregate the mass of insured people into two groups, to facilitate the balance of financial resources in the social security system.
SC Futuro Group
New civil servants who enter public service from 2024 will have their social security contributions invested in a capitalization fund.
According to the President of IPREV, Vânio Boing, “it is necessary to create a capitalization pension model, as the current simple distribution regime is becoming unsustainable”.
This capitalization fund will pay off throughout your working life and the amount of earnings will guarantee the employee’s retirement in the future, as well as the pension of his or her dependents.
SC Seguro Group
Servers joining until 2023 will continue to be part of the Simple Distribution Regime. This system will remain financially insufficiency as long as it exists and will be extinguished when the last beneficiary dies.
The State will guarantee retirement for those who already contribute to this pension system and will use its real estate assets to mitigate the deficit.
Social Security exemption rate
The project also proposes to increase the contribution exemption rate, which will result in a net increase in the monthly income of retirees and pensioners.
Currently, IPREV retirees and pensioners contribute a rate of 14% on earnings that exceed the minimum wage (R$ 1320.00).
With the new project, the government will increase the exemption rate progressively. In 2024, the exemption will cover income of up to 2 minimum wages. In 2025, up to 2.5 salaries and in 2026, up to 3 salaries.
The project, which must now be debated at Alesc, represents an attempt to balance the pension system and provide financial relief for taxpayers.