Brazil pension overhaul bill wins

RIO DE JANEIRO - Brazilian President Jair Bolsonaro's ambitious pension reform bill passed an initial vote in Congress on Wednesday, a major step for his efforts to boost confidence in the country's lagging economy.

In the first of two votes, the lower house of Brazil's legislature approved the reform measure, a boon for Bolsonaro whose signature economic policy has faced stiff resistance from trade unions and a hostile Congress.

Social activists and union members protested the proposed reforms in Sao Paulo on Wednesday evening.

"I don't want to work until I die," said one demonstrator's sign.

But the measure received support from 379 deputies, well above the required 308, while 131 voted against.

The proposal to introduce a minimum retirement age and increase contributions over a longer period of time is seen as crucial to Bolsonaro's ability to deliver on other promised measures to shake up Latin America's biggest economy, which is on the brink of recession.

The reform is expected to generate savings of around one trillion reais ($266 billion) over 10 years.

The lower house will hold a second vote before the bill can move to the Senate for two votes, most likely before the legislature goes into a two-week recess on July 18.

Changing the pension system requires three-fifths of Congress to support a constitutional amendment.

Bolsonaro has warned that Brazil's generous pension system would bankrupt the country if the changes were not adopted.

In 2018, Brazil's pension deficit - including public, private, state, municipal and military - reached 362 billion reais, which is the equivalent of 5.5 percent of GDP.

In 2011 it was 2.1 percent.

The deterioration is largely due to the 2015-16 recession, from which the country is still struggling to recover.

There has been growing consensus in Congress that pension reform is necessary, particularly as the population ages.

About 9.2 percent of Brazil's 209 million people were over the age of 65 last year, official data show. In 2060, the share is projected to be 25.5 percent.

The new measure would establish minimum retirement ages: 62 years for women and 65 for men.

Brazil is currently one of the few countries that does not require a minimum age for retirement.

Brazilian stocks closed at a record high Wednesday, hours before the vote, on optimism that the bill would pass the first round.

Agencies