Brasília (Reuters) -The National Social Security Council (CNPS) approved on Tuesday the rise in the payroll pay ceiling for INSS pensioners and retirees from 1.80% to 1.85% per month, limit still below the claimed by financial institutions.
Banks advocated the elevation of the ceiling to 1.99%, according to a proposal presented by the Brazilian Federation of Banks (Febraban) to the Council. The argument is that interest below this level is insufficient to ensure the profitability of operations compared to the Central Bank’s discharge from the Selic rate.
The proposal to increase the ceiling to 1.85% was made by the representative of the National Confederation of Trade in Goods, Services and Tourism in the Council, Helio Queiroz da Silva, and accepted by Social Security Minister Carlos Lupi, who initially defended the maintenance of the rate – then approved by the Council.
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Lupi said the new ceiling has “reasonableness.” “There have been two increases from Selic, one more announced, even smaller. If we await the third increase, (the impact) can be much greater, including the retired and the pensioner. When we start to give now, it dilutes this future impact a little,” he said.
CNPS gradually reduced interest rates for leaf loans to INSS beneficiaries from 1.91% in August 2023 to 1.66% in June 2024 and kept the limit unchanged until January when it raised it to 1.80%.
The BC has increased the Selic rate at 3.75 percentage point from September to 14.25%, the highest level in more than eight years, and indicated a less magnitude adjustment for its next monetary policy meeting in May.
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In defending the greater increase of the ceiling, the director of Febraban Ivo Mosca, representative of the bank sector on the board, argued that Selic’s squeeze by the BC has reduced the profit margin of operations. “This ends up reflecting on capture cost,” he said.
Regarding the expectation of the banking sector regarding new increases in the interest rate ceiling ahead, Mosca said that it is necessary to wait for projections of the basic interest rate movements. “(We need) to understand what the behavior of the future (interbank deposit) will be like, which, in fact, is what matters for the fundraising rate.”
The new ceiling will be valid five business days after the publication of the decision in the Federal Official Gazette.
