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ATTENTION: Judgment on the FGTS patch has been postponed by the STF

ATTENTION: Judgment on the FGTS patch has been postponed by the STF

Last Thursday, November 9, 2023, Minister Cristiano Zanin asked the Federal Supreme Court (STF) to reconsider the ruling that discussed the correction of the Service Guarantee Fund (FGTS). As a result, the process has been suspended and Zanin now has up to 90 days to take the case back to court.

The trial resumed after Minister Nunes Marquez returned to trial. So far, three votes have been registered in favor of changing the FGTS patch. These letters are from Ministers Roberto Barroso, the President and the Rapporteur of the case, André Mendonça, and Nunes Márquez.

According to a document sent by the Attorney General’s Office (AGU) to the Supreme Court, the change in the FGTS correction could generate an impact of about R$ 8.6 billion on the Union budget over the next four years. This will happen if the position defended by Chief Justice Roberto Barroso wins.

Why is FGTS correction such a controversial issue?

FGTS funds are used for various purposes, including protecting workers who have been dismissed without just cause and funding public policy and infrastructure work. However, the Solidarity Party questions the constitutionality of using the reference rate to correct the FGTS, arguing that the rate has not kept pace with inflation since 1999, harming workers’ purchasing power.

Minister Barroso, the rapporteur of the case, voted in favor of the FGTS offering at least the same value as the savings account, an understanding supported by Ministers Mendonça and Nunes Márquez.

Changes to FGTS patch only in 2025

In the November 9 session, Barroso modified his vote and decided that any changes to the fund correction would only be valid from 2025. He justified this decision by claiming that the 2024 Union Budget had already been drawn up and did not include such a change. Moreover, with the transitional rule between 2023 and 2024, Barroso proposed that the government distribute all of the fund’s profits to account holders, in addition to paying the reference rate – interest, which currently stands at 3% annually.

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Government position regarding the FGTS issue

The current government, led by President Luiz Inacio Lula da Silva, welcomed Zanin’s request for a point of view. The government has recently created several postponements and proposed agreements to postpone the decision on the FGTS. One is that the FGTS correction follows the Savings Accounts Index from 2025 onwards, a proposal that includes Secretary Barroso’s vision.