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UPDATE 1-Brazil Senate committee approves pension system overhaul

(Adds details on follow-on proposals, background)

BRASILIA, Sept 4 (Reuters) - Brazil's Senate constitutional affairs committee on Wednesday approved by a vote of 18-7 a bill that would overhaul the social security system and save the federal government some 1 trillion reais ($243 billion) over the next decade.

The vote adds to evidence that President Jair Bolsonaro's chief economic reform will see easy passage in the full Senate before he signs it into law. Overhaul of the costly pension system is being closely watched by investors worried about Brazil's huge budget deficit.

The committee is also expected to vote to draw up a parallel bill that would include state and municipal pension systems in a broader reform, saving an additional 350 million reais over a decade, according to its sponsor, Senator Tasso Jereissati.

That bill with follow-on proposals, which would need lower house approval after passing the Senate, was designed to avoid delaying a reform process that economists call essential to stabilizing Brazil's public finances and reigniting growth.

Senators excluded a proposal by Economy Minister Paulo Guedes to have privately managed retirement accounts based on worker and employer contributions, a so-called "capitalization" model adopted in other countries such as Chile. (Reporting by Maria Carolina Marcello and Anthony Boadle Editing by Leslie Adler and Richard Chang)