Brazilian Authorities Uncover INSS Fraud Scheme, Affecting 4.1 Million Retirees with Losses of R$6.3 Billion

The Brazilian Federal Police and the Comptroller General of the Union (CGU) have uncovered a significant fraud scheme within the National Social Security Institute (INSS), involving unauthorized deductions from the pensions and retirement benefits of approximately 4.1 million beneficiaries. The scheme, which ran from 2019 to 2024, is estimated to have resulted in a financial loss of at least R$6.3 billion, with some sources suggesting the total could reach R$90 billion. The fraud involved 12 entities and unions that were able to deduct payments from retirees' paychecks without proper authorization. Investigations have revealed that some of these entities managed to affiliate over 50,000 retirees in a single month, raising concerns about the legitimacy of these affiliations. The CGU's audit found that in 71.1% of the cases examined, there was no documentation proving the retirees' consent for these deductions. The CGU has recommended that the INSS stop intermediating these deductions. In response to the scandal, the INSS has promised a swift and straightforward reimbursement process for the affected retirees. The new president of the INSS, Gilberto Waller, has stated that the repayments will be made directly into the beneficiaries' accounts, without the need for them to visit a bank or use digital payment methods like PIX. The government is considering using public funds to compensate the victims, with plans to seek reimbursement from the implicated entities through legal action. The political fallout from the scandal has been significant, leading to the resignation of the then Minister of Social Security, Carlos Lupi, and the dismissal of several high-ranking INSS officials. The new Minister of Social Security, Wolney Queiroz, previously signed an amendment that relaxed controls over these deductions, facilitating the fraud. The opposition is pushing for the establishment of a Parliamentary Commission of Inquiry (CPI) to further investigate the fraud, despite resistance from some government allies. President Luiz Inácio Lula da Silva has convened meetings with his ministers and the new INSS leadership to address the crisis, emphasizing the urgency of resolving the issue. The Federal Police's Operation Sem Desconto has led to the discovery of R$30 million spent on real estate by those involved, with suspicions of money being transferred to tax havens. Additionally, a pensioner's son reported a loss of R$160 thousand due to the fraud. The INSS has received 5,700 complaints about unauthorized deductions from January 2024 to February 2025, and an association has claimed that the total amount defrauded could reach R$10 billion. The Federal Police also found notebooks with annotations indicating a 5% bribe paid to the INSS leadership, with references to 'Careca do INSS'.