FGTS Loan Withdrawal: How It Works
The Federal Government is preparing to release the withdrawal form of the Severance Pay Fund. This time the proposal is to allow the withdrawal of FGTS for loan repayment . Let’s explain how this will work and what the rules of this serve will be.
FGTS withdrawal for loan repayment
In order to stimulate consumption and move the economy, the government is preparing to release the FGTS withdrawal for loan repayment. The Provisional Measure that should allow this is already ready and will give the possibility of withdrawing resources to workers who resign and have a payroll loan to pay.
The proposal will also include in the withdrawal rules of FGTS workers who are dismissed for just cause, which is not allowed by law today. In addition, the rule should also include those employers who resign with their employers within the new form of dismissal included in the labor reform coming into force in November.
According to MP’s draft, the withdrawal of FGTS for loan repayment will be limited to 10% of the workers’ linked account balance. In addition, it will be authorized only in operations where the FGTS is given as collateral for the payroll loan.
According to budget data, over the next four years withdrawals from the Guarantee Fund for Service Time should exceed the inflows by $56 billion. It is noteworthy that the account does not consider, however, the new form of withdrawal created to stimulate the country’s economy.
The measure carries fears from members of the FGTS Board of Trustees, who fear the stimulus of fraud with the new possibility of withdrawal of FGTS for loan repayment. The fear is that consumers will pay the payroll and resign shortly thereafter, only to withdraw money from the Fund.
In addition, there is some doubt as to whether this withdrawal permit will really help the economy considering the low withdrawal limit.
FGTS as payroll loan guarantee
In July 2016, a law had already been enacted that authorized the use of the FGTS as collateral for the resulting loan. However, it did not have the expected result as there was no interest from the banking institutions.
Within the possibility of using the FGTS as a loan guarantee, banks can only receive the money when the worker is dismissed without cause, being the limit equivalent to 10% of the account balance and the integrity of the fine of 40%. In addition, the FGTS-secured loan had an interest rate cap of 3.5% per month, considered low by the financial sector.