Bolsonaro gave House Speaker Rodrigo Maia the proposal to increase the retirement age to 65 for men and 62 for women. "I was wrong in the past and we have the unique opportunity to really guarantee to future generations a pension that everyone can benefit from," Bolsonaro said Wednesday, referring to his previous opposition to such reform.
Under the current system, male and female workers can claim pension benefits after 30-to-35 years of contributions, respectively, meaning many can retire as early as 50 or 55. In 2018, the federal pension system for private sector workers had a deficit of nearly $55 billion, up 170 percent over 10 years, according to Marcel Balassiano, an economist at the university and business-focused think tank Fundacao Getulio Vargas.
Officials said the changes, which would be phased in, would save more than $310 billion over the next 10 years. However, if the current system remains unchanged, studies show Brazil's social security could collapse within two-to-three years.
The reform also aims to end the large divide between public and private sector employees. Federal public workers currently can receive well over $5,000 per month once they retire, while the majority of Brazilians, in the general social security regime, have a maximum pension of $1,479 a month, Balassiano's studies show.
The most populous nation in Latin America, has long been known for relatively generous pension benefits. Many economists argue the system isn't sustainable because people are living much longer after retirement.
The number of people in Brazil aged 65 and older is expected to more than triple in the next 40 years, and will account for nearly 40 percent of the population by 2050, according to a 2017 report from the Organization for Economic Cooperation and Development.
In comparison, men in OECD member countries require 44 years of contributions on average before they can get full benefits. Women require an average of 43 years of contributions. Experts praised the government's proposal, a central campaign promise by Bolsonaro and his University of Chicago-educated economy minister, Paulo Guedes.
Alberto Ramos, head of the Latin America economic research team at Goldman Sachs, said in a statement Wednesday the "robust and comprehensive" social security bill reduced some of the current system's "glaring inequities among different regimes."
The proposal will now have to pass Congress, where it will likely receive stiff opposition. Several attempts in recent years to curtail benefits have failed, often leading to nation-wide protests. This week, Vice President Hamilton Mourao told reporters he believed the government was still missing 60 to 70 votes to get the 308 votes needed to enact the reform.
Retirement benefits are enshrined in the constitution, meaning any reform requires at least three-fifths of both chambers of Congress. Backers of the proposal warned against passing a watered-down version.
Opponents of the pension reform argue that the proposal will hurt poor, older people the most. "There is not a line in the proposal about collecting outstanding payments from debtors, banks and state-owned companies," said lawmaker Jose Guimaraes of the left-wing Workers' Party.
Critics have also condemned the lack of immediate proposals to include the military, governed by a separate and particularly generous retirement plan. President Bolsonaro, a former army captain himself, has appointed several ex-army generals in his government.
As a congressman for 27 years, Bolsonaro often voted against proposals to reform the pension system. The far-right leader, who admitted during the campaign to not knowing much about the economy, says he was wrong to do that, and made pension reform a central pillar of his administration's agenda.