The pension reform that Congress will vote on, explained

Today, we break down the main points of the country’s pension reform. Bolsonaro loses another cabinet member. And the first major strike under Mr. Bolsonaro

Brazil’s pension reform, explained

After weeks of anticipation, the rapporteur of the pension reform, member of Congress Samuel Moreira, presented his report on the proposal—which is essentially the text Congress will vote on. Mr. Moreira altered at least 7 core points of the bill, in a bid to increase its chances of being approved (many of the changes we had anticipated in yesterday’s Daily Briefing). We explain the new rules:

• States and municipalities. Despite many states facing a dreadful financial situation, the report does not include state- and municipal-level public servants. Lawmakers believe local politicians didn’t show enough support for the pension reform, thus transferring the political burden of stricter retirement rules to Congress. As punishment, they won’t be included.

• Length of service. The minimum amount of years workers must contribute to the social security system will be 15 for women, and 20 for men. The original proposal had set a minimum of 20 years for both.

• Female teachers. Like law enforcement and rural workers, teachers already have special rules—so the government didn’t want to differentiate female teachers from their male counterparts. But, after pressure from the opposition, the report sets the minimum retirement age at 57 for female teachers, and 60 for males (for regular workers, it is 62 for women and 65 for men).

• Rural workers and poor citizens. Mr. Moreira’s report also leaves out the changes originally proposed to rural pensions and cuts to benefits paid to very poor elderly citizens and people with disabilities.

• Capitalization. Brazil will maintain its pay-as-you-go social security system, wherein current workers pay for older generations’ pensions. House leaders said the change to a capitalization mode (where each worker would be responsible for their own pensions) could maybe be voted on in the future.

• Transition. The original proposal offers three transition paths from the current to the new system—taking into account age, length of service, and the time remaining until individuals become eligible for full pensions. We now have a 4th one, catered to people close to retirement under the current rules. The idea is that they will double their remaining time until retirement if they want to benefit from the current framework.

• Savings. The government’s proposal would generate savings of BRL 1.2 trillion in 10 years. This one would generate roughly BRL 915bn. But the report also transfers a fund that finances unemployment insurance from the National Development Bank to the social security system—giving the pension system an additional BRL 217bn over 10 years.

Mr. Moreira’s report will be debated upon next week. It needs 25 of 49 votes to pass in the Special House Committee, before going to a roll call vote on the House floor.

• Go deeper: How Brazil’s pension system compares to other countries

Bolsonaro’s cabinet: third man down

Yesterday, President Jair Bolsonaro fired his Secretary of Government, retired Army General Santos Cruz. For months, he had been on the receiving end of attacks by the administration’s ideological zealots—which include the president’s sons and Olavo de Carvalho, his ideological guru. Gen. Santos Cruz was against the over-politicization of institutions such as Apex (the trade promotion agency), or the Education Ministry.

In the ideological patchwork that is the Bolsonaro administration, the move places the “moral crusaders” above the military wing and the Car Wash nucleus—as Justice Minister Sergio Moro’s reputation has taken a hit with the recent leaks of improper communications with prosecutors during his days as a judge.

The firing (the third cabinet minister to go in less than 6 months) was decided upon days ago—so much so that the government immediately announced Gen. Santos Cruz’s replacement: General Luiz Eduardo Ramos, the current military chief of the Southeast region and a close friend of the president’s. Mr. Bolsonaro reportedly calls him his “pitbull.” Which is curiously also the nickname of Carlos Bolsonaro, his second son.

The first general strike under Jair Bolsonaro

Today, Jair Bolsonaro will face the first general strike of his presidency. Protests were called all over the country, in what trade unions hope will be a massive response to the government’s pension reform bill.

Two main factors make organizers hope this strike will be bigger than those of April 28, 2018, under then-President Michel Temer: (a) this time around, trade unions which are normally opposed to one another have now vowed to march together, and (b) the crisis generated by recent leaks involving Justice Minister Sergio Moro has increased the government’s instability.

In São Paulo, one metro line is completely closed, while three others are running partial operations. In Rio, protesters are blocking many important roads. Drivers are taking one hour to cross the Rio-Niteroi bridge, usually a 13-minute drive.

Unions want to force a negotiation channel with House Speaker Rodrigo Maia. In response, right-wing movements are calling for demonstrations of their own—in favor of the reform, and in support for Mr. Moro.

Also noteworthy

Leaks 1. After saying there was no illegality in the conversations leaked by website The Intercept between himself and Operation Car Wash prosecutors (there was), Justice Minister Sergio Moro has changed his approach to the case. He and some of the prosecutors involved are questioning the authenticity of the content. And he challenged The Intercept to publish everything the website has got.

Leaks 2. While there is no confirmation if the website’s source was a hacker or a member of the messaging group, the Federal Police is investigating hacks against at least 12 people related to Operation Car Wash since April. The modus operandi suggests a coordinated operation, carried out by someone in Europe or Asia. The main theory right now is that the hacker (or hackers) collected the message logs by violating one of the prosecutors’ desktop-based version of the Telegram app.

Apologies. Forced by a court’s decision, President Jair Bolsonaro published on Twitter an apology to Congresswoman Maria do Rosário—whom he called “not worth raping” for “being too ugly” in 2014. The president said in the document he wanted to reaffirm his “utmost respect for women.”

Homophobia. After four months, the Supreme Court has finalized its trial on whether or not homophobia should be a crime. By an 8-3 margin, the justices ruled that homophobia should be criminalized—while stating that religious leaders have the right to advise their congregation against homosexuality, based on the principles of religious freedom, “as long as they don’t engage in hate speech.”

Argentina. Last week, Presidents Jair Bolsonaro (Brazil) and Mauricio Macri (Argentina) talked about a common currency for both countries. However, the two nations can’t even agree on a deal regulating trade for the auto sector. Argentina wants to keep the current system of administered trade for car and auto parts running until 2023—while Brazil wants free trade as soon as possible.

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