Nov. 6 (Bloomberg) -- Brazil’s government may agree to raise some pension payments in a bid to defeat a more costly proposal, Folha de Sao Paulo reported, without saying how it obtained the information.

President Luiz Inacio Lula da Silva is trying to broker a deal with unions to head off a proposal that would pass along any future minimum wage increases to all pensioners, the Sao Paulo newspaper reported.

The government proposal, which would apply only to pensions greater than the minimum wage, would peg increases to an amount equivalent to inflation plus half of the growth in gross domestic product, Folha reported.

Lula’s proposal would cost the government 3 billion reais ($1.75 billion) next year, while legislation in Congress would cost 6 billion reais, Folha reported, citing government estimates.

The presidential press office declined to comment when contacted by Bloomberg News.

To contact the reporter on this story: Andre Soliani in Brasilia at at asoliani@bloomberg.net

Last Updated: November 6, 2009 08:33 EST