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New Law Approved in the Senate Prohibits Associative Deductions Directly from INSS Benefits, Requires Refunds Within 30 Days, and Changes Rules for Consignment Loans, but Is Sent for Sanction with Points That May Be Vetoed by the Government
The new law approved in the Senate that addresses INSS benefits directly targets a practice that has become routine in recent years: the direct deductions of association dues from retirement and pension payments, often without the insured even realizing it. The text prohibits these charges from continuing to be made from the payroll, even when the retiree agrees, and stipulates that, from now on, contributions to associations, confederations, and unions must be paid via bank slip. The new law is presented as a reaction to serial frauds against retirees and pensioners, with the declared aim of protecting the INSS payroll from abusive deductions.
At the same time, the new law redefines sensitive points of the consignment loan system by tightening the requirements for contract authorization, requiring mandatory refunds of amounts charged improperly, and adjusting who sets the interest ceiling for this modality. The project, already approved in the House of Representatives, is now sent for presidential sanction with expectations of vetoes on at least two provisions, precisely the most sensitive regarding public finances and the governance of the credit system linked to social security. The final result will define how much this legislative response will truly be a watershed in protecting those who depend month to month on INSS benefits.
What Changes with the New Law Approved on INSS Deductions
The most immediate aspect of the new law is the prohibition of associative dues deductions directly from INSS benefits.
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The text approved in the Senate makes it clear that, even with the insured’s authorization, the social security payroll is now protected against this type of debt.
In practice, all contributions to associations, confederations, or unions must be paid separately, via bank slip, removing the social security benefit from the center of these operations.
The rapporteur in the Senate emphasized that the objective is to prevent the continuation of a scheme considered fraudulent, which had been using the INSS payment structure to impose deductions on millions of vulnerable individuals.
By removing the payroll from the equation, the new law aims to reduce the ease with which these debts were imposed, often without transparency.
The message from Congress is that the social security benefit returns to being a protected space, and not an automatic channel for charges from private entities.
Mandatory Refunds and Active Search for Affected Parties
The new law is not limited to blocking new deductions. It also establishes a corrective mechanism for what has already been improperly charged.
Associative entities and financial institutions involved in undue charges will be responsible for refunding the amounts to beneficiaries within 30 days, starting from the notification or administrative decision that recognizes the irregularity.
If this deadline is not met, the INSS must reimburse the insured and subsequently seek to recover the funds from those responsible, including the possibility of seizing assets.
Another relevant point is the obligation for active searching by the INSS.
The project stipulates that the institute must identify and seek out affected beneficiaries, prioritizing those in more vulnerable situations.
This means that the new law turns into a legal obligation procedures that had already been adopted administratively, raising the level of responsibility of the INSS itself in repairing the damages.
The logic is simple: it is not enough to prohibit the deduction; it is also necessary to find those who were harmed and return what was taken improperly.
Consigned Loans Under New Safety Rules
In consignment loans, the new law reinforces the scrutiny around the authorization of operations.
The permissions from insured individuals for loans with payroll deductions need to be formalized through more robust instruments, such as public deeds, private instruments with notarized signature, qualified electronic signatures, or biometrics.
The intention is to make it difficult to enter into contracts without the retiree’s full understanding, reducing the space for fraud carried out by phone or through manipulated registrations.
The approved text also incorporates an amendment that ends the possibility of early payment of debts in consigned loans, readjusting how these contracts can be renegotiated and settled.
Furthermore, the new law provides that the interest ceiling for consigned loans will be set by the National Monetary Council, CMN, and not by the panel that traditionally oversees social security.
This point, however, is one that has already been surrounded by controversy and is at the center of discussions about potential vetoes.
Points of the New Law Expected to Be Vetoed
Since the Senate vote, political leaders and government members have openly discussed the possibility of vetoing two specific provisions of the new law.
The first is the provision that states that the INSS must reimburse retirees and pensioners with resources from the Union, without using revenue from social security, when entities do not return the amounts within 30 days.
The political assessment is that this obligation creates a significant liability for the Treasury and may open the door to legal disputes regarding the source of the funds.
The second sensitive point is precisely the change in the body responsible for defining the interest ceiling for consigned loans.
The text shifts this competence to the CMN, whereas today it remains with the National Social Security Council.
There is an expectation that the president will veto this provision to keep control of consigned loan interest closer to social security policy, and not solely to monetary policy.
These vetoes, if confirmed, will reshape the new law and demonstrate that the balance between consumer protection and fiscal responsibility is still up for debate.
Legislative Response to the Billion-Dollar Associative Dues Scheme
The new law is also presented as a direct response to the work of the CPMI of the INSS, which investigates the scheme of fraud involving associative dues.
The commission found that, just from these deviations, retirees and pensioners would have lost about 6.3 billion reais in a process that affected millions of beneficiaries.
For the president of the CPMI, the law serves as a message that Congress no longer intends to tolerate the use of social security payroll as fertile ground for frauds and unauthorized deductions.
By safeguarding the structure of the INSS, creating rapid refund obligations, holding entities and banks accountable, and tightening the conditions for consigned loans, the new law aims to reshape the relationship between retirees, the financial system, and associations.
Nevertheless, the final impact will depend on how the text is sanctioned and, above all, on how it will be applied in practice by regulatory agencies and financial institutions.
At the heart of this discussion is the idea that those who have worked their entire lives should not see their benefits consumed by deductions they never authorized.
For you, who closely follows this topic: do you think the new law is sufficient to protect retirees and pensioners from fraud and abuse, or is there still some essential measure that Congress should include in future changes?
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