minimum age of 55 years is insufficient, says CLP

Setting a minimum age of 55 for military personnel to join the reserves will have little effect on federal spending. The impact of the measure – which could be included in the Lula government’s spending containment package – will be just R$12 million in 2025, according to a technical note from the think tank Center for Public Leadership (CLP).

The amount is negligible compared to the cost of benefits for veterans and retirees of the Armed Forces. The balance between the military’s contributions and the expenses of its social protection system is negative, approximately R$50 billion per year. The amount is covered by the Treasury.

“The savings generated [com a idade mínima de 55 anos] would be just R$12 million in 2025 and R$25 million in 2030. These values ​​consider a fiscal replacement rate of 50%, that is, the cost of the new military personnel who would replace the retired ones would be half their salary”, says the text, signed by economist Daniel Duque, manager of Technical Intelligence at CLP.

Another measure being studied by the government should have a greater effect. According to the CLP, the creation of a 3.5% contribution to the military’s health fund could generate extra revenue of R$2 billion per year.

“Although the measures represent progress, they have limited fiscal impact and are not sufficient to solve the structural problem of the military pension system”, says the note from the Center for Public Leadership.

CLP defends the end of full benefits for inactive military personnel and pensioners

The CLP advocates “more comprehensive measures” to contain spending on military veterans. Among them, setting the minimum age for transfer to the paid reserve at 60 years old.

“This would align Brazil with international practices and reduce pressure on the social security system, as military personnel would remain on active duty for longer, contributing for a longer period before becoming beneficiaries”, states the note.

The Center considers it “essential” to end full benefits, following what has already been implemented for civil servants hired after 2003. The remuneration of military veterans and pensioners is equivalent to the last pay received on active duty, and they are entitled to the same adjustments granted to active duty personnel.

“This change would imply that benefits would be calculated based on average earnings, and not on the last salary received, making the system more sustainable. It is also crucial to eliminate pensions that do not exist in the General Social Security Regime, ensuring equity among various social security systems in the country”, concludes the CLP.

Military personnel reject the terms “retirement” and “pension”

The CLP text talks about “retirement” and “pension” for the military. Both terms are rejected by the Armed Forces. The argument is that military personnel do not retire, as they remain available when they are in reserve.

Furthermore, even though it defends changes to the rules, the Federal Audit Court (TCU) understands that the military system cannot be considered social security.

Benefits for inactive personnel are fully funded by the Treasury, based on a 1980 law. And contributions deducted from military personnel are only used to pay for pensions. According to the government’s most recent projection, this year the collection of contributions should total R$9.5 billion, just over a third of the pension disbursement, estimated at R$27 billion.