Government proposes to Supreme Court to use official inflation to correct FGTS balance

The trial is expected to resume on Thursday

Marcelo Camargo/Brazilian Agency – Archive

The AGU (Prosecutor General of the Federation) submitted to the STF (Federal Supreme Court) a proposal to set the IPCA, the country's official inflation, as the reference for correcting FGTS (Service Time Guarantee Fund) deposits. The government's request came as part of a process discussing the monetary correction of the Fund, which will be resumed on Thursday (4).

Currently, the FGTS is adjusted by TR (reference rate) plus 3%. The Solidarity Party, which introduced the measure, claims that since 1999 the index has not been sufficient to replace workers' purchasing power.

So far, Ministers Luis Roberto Barroso (Rapporteur), André Mendonça, and Nunes Márquez have voted in favor of the return on the Social Security Fund balance being at least equal to the return on savings.

In October, Finance Ministers Fernando Haddad of the AGU and Jorge Messias, Minister of Cities, Jader Filho, and Minister of Labor and Employment, Luiz Marinho, expressed concerns about the fiscal and social budget to the head of the Consolidated Trust Fund, Luis Roberto Barroso. The nature of the ruling in the case.

Barroso reiterated his position that he considers the points raised important, but he considers it unfair that housing financing is provided through the FGTS to workers with a correction under the indicators of savings accounts. There was agreement on another round of talks in search of a solution.

In April 2023, Barroso announced in a vote that the Social Security Fund wage could not be less than the savings account wage. In November, he proposed a new form and voted to guarantee Social Security Fund balances the right to receive a minimum annual wage (including income, interest and dividends) at least equal to a savings account.

The Minister voted to specify that the effects of this decision will be reproduced prospectively on new deposits made from 2025 onwards; It stipulates, as a transitional rule applicable to the years 2023 and 2024, that all profits achieved by FGTS in the year will be distributed to shareholders.

The issue of past losses can only be assessed and resolved through legislation and/or through negotiation between labor entities and the executive.