[Brazil] New INSS payroll loan rules

Current favourable conditions are leading retirees in Brazil to seek payroll deductible loans. In turn, the INSS (Instituto Nacional do Seguro Social) can put up a portion of the benefits income as security for debt repayment, therefore the interest charged for the service is less, Lodi Valley News reports.

In 2020, in the wake of the COVID-19 pandemic, in order to facilitate the contracting of credit services by those assisted by the Agency, the procedure for raising the limit of the loan to 40 per cent was implemented.

However, the uplift was only valid until December 31, 2021. This year, the beneficiaries of the authority can use only 35 per cent of the interest in contracting the loan, as the payroll limit reverts to the previous percentage.

It should be noted that in addition to changing the limit, the interest ceiling charged for the loan category will increase. Lodi Valley News summarises the planned changes.

INSS Payroll Loan in 2022

Essentially the changes refer to the percentage of benefits that can be committed in the payroll loan, the increase in the interest charged on the contract for the service and the deadline for repaying the debt. All are detailed below:

Salary loan limit

* From April 2020 to December 2021: It was possible to commit 35 per cent of the benefit to a payroll loan and another 5 per cent to contracting a credit card, in total 40 per cent;

* The rule applicable in 2022: Now, it is possible to commit 30 per cent of the benefit to a payroll loan and another 5 per cent to contracting a credit card, in total 35 per cent.

Salary benefits

* Loan Limit Fee: increases from 1.8 per cent to 2.4 per cent per month;

* Credit Card Limit Fees: increases from 2.7 per cent to 3.06 per month;

Loan repayment deadline

* Before: The contractor had up to 84 months (7 years) to pay off the debt arising from the loan;

* Now: The debt repayment deadline is 72 months (6 years).

It is important to note that this year the rule that allowed a reduction of the grace period to apply for a new payroll loan after contracting from a previous day to 30 days is no longer in effect. In 2022, this period will revert to 90 days.

Current favourable conditions are leading retirees in Brazil to seek payroll deductible loans. In turn, the INSS (Instituto Nacional do Seguro Social) can put up a portion of the benefits income as security for debt repayment, therefore the interest charged for the service is less, Lodi Valley News reports.

In 2020, in the wake of the COVID-19 pandemic, in order to facilitate the contracting of credit services by those assisted by the Agency, the procedure for raising the limit of the loan to 40 per cent was implemented.

However, the uplift was only valid until December 31, 2021. This year, the beneficiaries of the authority can use only 35 per cent of the interest in contracting the loan, as the payroll limit reverts to the previous percentage.

It should be noted that in addition to changing the limit, the interest ceiling charged for the loan category will increase. Lodi Valley News summarises the planned changes.

INSS Payroll Loan in 2022

Essentially the changes refer to the percentage of benefits that can be committed in the payroll loan, the increase in the interest charged on the contract for the service and the deadline for repaying the debt. All are detailed below:

Salary loan limit

* From April 2020 to December 2021: It was possible to commit 35 per cent of the benefit to a payroll loan and another 5 per cent to contracting a credit card, in total 40 per cent;

* The rule applicable in 2022: Now, it is possible to commit 30 per cent of the benefit to a payroll loan and another 5 per cent to contracting a credit card, in total 35 per cent.

Salary benefits

* Loan Limit Fee: increases from 1.8 per cent to 2.4 per cent per month;

* Credit Card Limit Fees: increases from 2.7 per cent to 3.06 per month;

Loan repayment deadline

* Before: The contractor had up to 84 months (7 years) to pay off the debt arising from the loan;

* Now: The debt repayment deadline is 72 months (6 years).

It is important to note that this year the rule that allowed a reduction of the grace period to apply for a new payroll loan after contracting from a previous day to 30 days is no longer in effect. In 2022, this period will revert to 90 days.