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FGTS Correction: Government Proposes IPCA Instead of TR in ADI 5090, but Retroactive Payments Remain Outstanding
The discussion about the FGTS correction gained new momentum in 2025 with the proposal from the Attorney General’s Office of the Union (AGU) in the ADI 5090 case, which is pending before the Supreme Federal Court. The central point is the replacement of the Reference Rate (TR) with the Broad Consumer Price Index (IPCA) as the minimum reference for updating account balances.
According to Professor Carlos Mendes, the change is significant because the IPCA tracks real inflation, whereas the TR, used since the 1990s, has been considered outdated in various rulings. The proposal, however, focuses only on future corrections — which leaves the major impasse: the payment of accumulated losses over the past decades.
Who Can Benefit from the Change
If the Supreme Court confirms the adoption of the IPCA as the official index, all workers with active or inactive FGTS accounts will have their balances protected against inflationary losses from now on.
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This means that monthly deposits made by companies on behalf of employees will have a minimum return equivalent to inflation, in addition to 3% per year and the distribution of profits already provided by law.
The issue lies in the past: those who filed lawsuits asking for a review of the deposits are still awaiting a definitive response.
If the Supreme Court declares the TR unconstitutional, the right to retroactive review will be extended, potentially reaching millions of Brazilians who have suffered losses since the 1990s.
The STF’s Dilemma and Barroso’s Role
The minister Luís Roberto Barroso, president of the STF and rapporteur of ADI 5090, had previously advocated for replacing the TR with the savings account remuneration.
Now, with the government’s proposal and support from labor unions like the CUT, he will need to assess whether the IPCA is the appropriate index.
The greater dilemma lies in retroactivity.
Declaring the TR unconstitutional would pave the way for billion-dollar compensation to workers.
On the other hand, restricting the change only to the future would preserve public accounts, but would frustrate millions of ongoing lawsuits in labor courts and federal courts.
How Much It Could Cost Public Finances
Experts warn that, if the STF opts for retroactivity, the fiscal impact could exceed hundreds of billions of reais, considering the lag of the TR compared to inflation since the 1990s.
For Professor Carlos Mendes, it represents a “legal and economic time bomb”: while correcting a historical distortion, it could create a difficult-to-manage liability for the Union.
The decision would have an immediate effect on the first-instance courts.
Judges across the country would gain support to order the replacement of the TR with the IPCA, multiplying favorable rulings for workers.
Why Unions Are Pressuring for a Quick Decision
Labor unions and workers’ associations have been pressing the STF not to postpone the trial again, initially scheduled for April 4, 2025, but it did not take place.
The argument is that millions of Brazilians have been waiting for over a decade for a decision, unsure if they will be entitled to retroactive amounts.
On the government’s side, the proposal to limit the correction to the future seeks to provide fiscal predictability, but it ended up generating a side effect: it opened the possibility that the court itself may be compelled to extend the effects to the past if it considers the TR unconstitutional.
Is It Worth It to File a Lawsuit Now?
For Professor Carlos Mendes, the answer depends on the worker’s profile.
Those who have already gone to court are in a better position if the STF decides for retroactivity.
Meanwhile, those who have not yet filed may wait for the final decision to assess their next steps.
The risk, according to Mendes, is that the Supreme may adopt the so-called modulation of effects, limiting gains only to those who already had a case in progress.
Therefore, each case needs to be analyzed carefully and with legal guidance.
The government’s proposal on the FGTS correction seeks to end the controversy, but it may have opened the door for the largest labor revision in the country’s history.
And you, do you believe that the STF should guarantee retroactive payment of losses or do you think that could overly compromise public finances? Have you filed a lawsuit to review the FGTS? Share your opinion in the comments — we want to hear real experiences from those following this crucial judgment.
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