The Brazilian government has announced the release of funds from the Fundo de Garantia por Tempo de Serviço (FGTS) for workers who opted for the anniversary withdrawal and were dismissed without just cause. This significant move is set to benefit approximately 12 million individuals, injecting around R$ 12 billion (approximately $2.4 billion) backinto the economy.
According to reports from Agência Brasil, the measure will be implemented with the signing of a medida provisória (MP) on Friday, February 28, by President Luiz Lula da Silva. This new provision aims to resolve restrictions preventing these workers from accessing their total FGTS balances after voluntary opting for the anniversary withdrawal method initiated back in 2019, which began to take effect starting January 2020.
The consequence of choosing the anniversary withdrawal option meant workers could receive only part of their FGTS balance each year during their birthday month. If dismissed, they could only access the penalty payments, leaving their total account balance trapped. The newly proposed MP will allow access to these trapped funds for anyone who was terminated from their positions from January 2020 until the date of the MP’s release.
The release of these funds will occur in two distinct phases. During the first phase, which starts on March 6, 2025, workers can withdraw up to R$ 3,000. If their entitlement exceeds this amount, the remaining balance will be available approximately 110 days later.
For practical implementation, the payments will be credited directly to the FGTS accounts of beneficiaries. The Ministry of Labor has clarified the automatic nature of these deposits, ensuring efficiency and ease for those involved. Workers dismissed between January 2020 and the date of the MP will automatically receive the applicable funds without needing to file additional paperwork or claims.
Historically, the FGTS served as a financial safety net for Brazilian workers, enabling them to access their savings under specific circumstances such as retirement, home purchase, or termination from employment. The introduction of the anniversary withdrawal option, which altered access conditions, has led to considerable confusion among workers, many of whom were unaware of the impacts of choosing this method.
Government officials, including Luiz Marinho, the Minister of Labor, believe the new measure will support the economy by providing workers with access to much-needed funds, especially during challenging financial times, such as those experienced since the onset of the COVID-19 pandemic. “We estimate the measure will infuse R$ 12 billion back to the market,” said Marinho during recent statements.
The approval of this change is also seen as politically strategic. The current administration, led by President Lula, is facing declining popularity ratings. By facilitating access to FGTS funds, the government aims to reconnect with workers and improve its standing among the electorate.
It’s worth noting, though, the government has stated the measure will not apply to any future dismissals; meaning, if workers who have chosen the anniversary withdrawal option are let go after the MP's implementation date, they will still be bound by the previous rules. They will only have access to the penalty payment rather than the full FGTS balance until they adhere to traditional withdrawal terms again, requiring another two-year wait.
The proposal has garnered attention across various sectors, including concerns from the construction industry over the potential reductions to the FGTS balance. Given the reliance of construction financing on FGTS funds, experts warn the increased withdrawals could affect funding for new housing projects.
According to the data provided, the move will be backed by timely operational capabilities from the Caixa Econômica Federal, tasked with facilitating these withdrawals. The bank has earmarked various methods for withdrawal—from digital channels to physical branch interactions—to accommodate beneficiaries.
Critics and advocates alike are closely watching how the measure will impact those affected and whether the government can effectively balance between providing needed support to workers and maintaining the financial integrity of the FGTS. Nonetheless, the upcoming release presents immediate relief for millions of workers awaiting access to their hard-earned savings.