Inflation forces the government to correct the increase in pensions – Social Security

The government has withdrawn from implementing a pension modernization formula that would give increases of more than 8% to the vast majority of retirees, but in light of the commitments it has made, it will have to review legislation that states that Most pensions (up to around 960 euros) increased by 4.43% in January🇧🇷

What the CEO said was that the half-pension amount that was paid out in October (equivalent to 3.57% of the annual annuity amount) added to the increments he set for January ensures that retirees don’t arrive at the end of next year with less cash than they would have if the formula (Even though they lose money from 2024🇧🇷

It turns out that the legislation takes into account not only the evolution of GDP in the past two years, but also the average homeless inflation recorded in November and both of which are higher than projections when the calculations are made in September.

Latest GDP estimates (confirmed today) indicates an average growth of 4.78%, above the 4.5% rate considered by the government. Inflation without housing averaged 7.46% in November, according to an estimate by the National Institute of Statistics, higher than the 7.1% considered by the executive.

This means that, due to inflation in the case of the lowest pensions, it may be necessary to add four or five tenths to the value predicted by the government (4.43%), bringing the nominal increase in January closer to 4.8%. or 4, 9%. The values ​​are uncertain because it is sufficient to round the average GDP to the nearest tenth or hundredth for the result to change slightly. Increasing the level of pensions in the first degree She is, yes, rounded to ten🇧🇷

This is because in a normal situation, with growth above 3%, the update of pensions up to 2 IAS corresponds to 20% of average GDP (0.96 points) plus the average value of the CPI without housing in November (7.46 points) but the government is now withdrawing the amount of the extraordinary supplement corresponding to half board already paid in October (3.57 points).

In the case of a pension of 500 euros, for example, about 24.2 euros will be increased. The difference guaranteed by the correction compared to what has already been announced by the government is 2.7 euros per month.

Similarly, pensioners between 6 and 12 IAS may have an increase of four tenths (plus the expected 4%, to 4.49%) and the following, up to 12 IAS, 3.5 tenths (going to 3.89).

Nothing prevents the executive branch, which has a majority, from amending its law. At the suggestion of PS, the amendment to the State Budget Law of 2023 was approved, which authorizes the government to make the correction by decree.

Negócios has asked the Ministry of Labor and Social Security (MTSSS) for comment and is awaiting a response.

The Social Support Index (IAS) will also rise further

Although it announced that the index of social support (IAS) would rise by 8% next year, the government did not repeal the legislation stipulating that this index on which a cascade of social support depends is calculated in the same way as the first level. From pensions: 20% of GDP plus average inflation with no housing at the end of the year (confirmed, it will be November).

The Ministry of Labor had already assured the business sector that it would also update the IAS under the legal terms. Thus, if the indicators available now are confirmed, this indicator may increase by about 8.4%, instead of the announced 8%, to 481.09 euros in 2023.

International accounting standards, for example, depend on the minimum and maximum amount of unemployment benefit, the amount of social unemployment benefit, and the levels of updating various benefits, including pensions. You should also depend on the RSI value, A legal rule that has been forgotten in recent years🇧🇷

News last updated at 12:49pm with a slight correction to the calculations due to the new average calculated by the GDP data published today. The IAS value has been corrected to €481.09.