As the latest step in the process to reform Brazil’s social security system, President Jair Bolsonaro presented the government’s proposal to overhaul military pensions.
While the bill provides significant savings for the public treasury, the move to cut military pensions was accompanied by a vast (and expensive) career restructuring program for the Armed Forces, greatly reducing the amount saved by the overhaul.
The lack of a bill to reform military pensions caused the general social security overhaul process to come to a standstill in the House of Representatives, as the president of the Committee of Constitution and Justice (CCJ) demanded the proposal be submitted before moving forward with the broader pension reform bill. Now, the CCJ is expected to approve the government’s reform by the first week of April, allowing it to move on to the next phase of processing.
The main pillars of the reform proposal came as no surprise. The minimum length of service for members of the military increased from 30 to 35 years, while the rate of pension contributions paid will rise to 10.5 percent (from 7.5 percent), over a transition period of three years.
One of the more controversial aspects of the current military pension system is the benefits paid to family members of the Armed Forces. Today’s proposal establishes that these pensions will also require contributions of 10.5 percent.
The Ministry of the Economy calculates that the proposed alterations to military pensions will save the public treasury BRL 97.3 billion over ten years. However, the real decrease in spending will be severely affected by a simultaneous “career restructuring program” for the Armed Forces, proposed alongside the pension reform as a way of softening the blow for members of the military.
The Armed Forces will not see any base salary raises, but sizable bonuses will be put in place that could increase the gross monthly earnings of high-ranking officers by up to 76 percent. According to the changes, the military will now have access to so-called “military availability” and “training” benefits, a program which will cost the federal government roughly BRL 86.8 billion over 10 years.
Consequently, the real savings of the military pension overhaul amounts to slightly over BRL 10 billion in 10 years—less than what was reported by Vice President Hamilton Mourão earlier in the week.
Military pension reform: a profitable sacrifice
Despite the increase in pension contributions, the sum total of the military’s social security overhaul is reasonably favorable to members of the Armed Forces, especially those in higher ranks.
One of the bonuses being offered to the military in the new restructuring plan is the so-called “availability benefit,” which offers an added percentage on top of monthly military salaries in exchange for their “exclusive dedication” to the Armed Forces. The percentages on the table vary from an added 5 to 32 percent on military paychecks, depending on rank.
Curiously, the informative document presented to journalists does not include a bonus percentage for top-ranking officers (such as Army Generals, Admirals, and Lieutenant-Brigadiers), but in a previously leaked version of the proposal, made by the Ministry of Defense, these ranks would receive an added 40 percent on top their monthly salaries as “availability benefits.”
Furthermore, members of the military will also see significant increases in the already existing training benefits, which gives bonuses to members of the Armed Forces who undertake training course during their careers. For studies classed as “Category I,” monthly bonuses will increase from 30 percent to a whopping 73 percent.