Open supplementary retirement

You know what it is open supplementary retirementWhat is the difference between it and a closed supplementary retirement plan?

What is open supplementary retirement?

This retirement benefit was created to supplement the INSS (Brazilian Social Security Institute) retirement pension.

In Brazil, there are two retirement models: social and private. Social retirement is the most familiar, administered by the INSS (National Institute of Social Security).

It has a specific ceiling and is subject to political changes that are not under the retiree's control.

Furthermore, it has several rules that one must meet to be a beneficiary.

Now, the private supplementary retirement There are two variations, the closed one, which you can find more details about in our article.Closed supplementary retirement plan.

The other option is open supplementary retirement, which is what we are discussing today.

In this case, it can be done by anyone, without needing to have an employment relationship, participate in any professional group or cooperative.

In fact, that's the main difference between them.

In other words, to participate in a closed supplementary retirement plan, you will need to be working for a sponsoring company that offers this benefit.

Furthermore, it is managed by non-profit institutions and overseen by Previc (National Superintendence of Complementary Pension Plans).

Regarding the open supplementary retirement, she is inspected by Susep (Superintendence of Private Insurance), being administered by for-profit companies.

There are two types of private pension plans: PGBL and VGBL.

Both work the same way, meaning the contributor makes their contributions monthly and only starts withdrawing funds at retirement age.

At this time, you can choose to withdraw the full amount or receive it monthly, just like with social security benefits.

Although it's an investment model focused on retirement, many people contribute for other purposes, such as financing their child's future education.

This is because the plan has excellent tax benefits, therefore it can be very advantageous for supporting other future projects.

What is PGBL?

This is the Free Benefit Generating Plan. This is the ideal model for those who file income tax returns and have higher purchasing power.

This relates to the fact that it allows for a reduction of up to 121% of annual taxable income in social security contributions.

In fact, that's one of its main features. Furthermore, with it, you can get a refund of your income tax at the time of redemption.

In PGBL (Private Pension Plan), there are two forms of taxation: the regressive or progressive tax table. If you intend to focus on long-term investment, the ideal taxation is the regressive one.

That's because the longer your money stays invested, the lower the taxes will be.

Ah! It's worth highlighting that the open supplementary pension It covers not only retirement due to age, but also disability retirement and death benefits, for example.

What is VGBL?

This acronym stands for Life Generating Free Benefits. It offers survival coverage and is categorized as personal insurance.

In this option, income tax is levied only on accumulated profits.

In addition, it is suitable for those who do not file an income tax return or who file a simplified return.

The major drawback of VGBL, which makes it stand out, is that it has three fees: an administration fee, charged annually, and a loading fee, which applies to each contribution made.

Finally, we have the Income Tax rate; in this case, it will only be charged on the final return of the investment.

What is the purpose of an open supplementary retirement plan?

The purpose of an open supplementary retirement plan is to supplement INSS (Brazilian Social Security Institute) retirement benefits.

Let's say you've done your math and planned for the future and realized that you won't be able to live well on traditional retirement alone.

In other words, you won't be able to maintain your living expenses and will face difficulties, so if you have a supplementary pension you can avoid future problems.

In Brazil, it is very common to see retired people doing odd jobs to earn extra income.

This is, to say the least, sad and frustrating. A person who has worked for so many years, and when it's time to rest, can't, because they wouldn't be able to support themselves financially.

Unfortunately, the retirement benefit is not enough, even at a time when expenses are increasing, for example, with medicine and consultations.

Therefore, efforts and measures to avoid problems must come from ourselves.

Therefore, it is very important to invest in a long-term supplementary retirement plan, only then will you be able to enjoy the last years of your life in peace and tranquility.

How to choose an open supplementary pension plan?

There are a few points to compare when choosing a open supplementary retirement plan.

First, you need to choose which plan option is ideal for you: PGBL or VGBL?

The second option is to define the tax regime: progressive or regressive? Evaluate which option is most economical in the short, medium, and long term, and choose the ideal one.

The third important point is to compare rates offered by banks and insurance companies. This is important for choosing the most cost-effective plan.

This service includes 4 fees, which are:

Administrative;
Input loading;
Output loading;
Performance rate.

Therefore, evaluate the percentage before choosing the insurance company or bank to apply to.

Finally, assess your investment profile to decide which fund is ideal for you.

The insurance company itself where you're going to invest in open supplementary retirement This can help you with that issue.

Conclusion

Being able to plan your future and having the opportunity to reduce the risks of financial instability is possible.

In a country of political and economic uncertainty, it's ideal to be prepared.

Especially when government efforts to improve the social security system in a direction that benefits the beneficiary are not strong.

So consider investing in open supplementary retirementCarefully evaluate the plans and insurance companies, and compare them; only then can you be sure you've made a good choice.

To learn more about Private Pension Plans, click here. here And read the text we have prepared for you.

Life and Finance

Nara

Writer and aspiring Virtual Assistant. Passionate about the Digital Financial Market and its various aspects. Certified by Rock Content and HubSpot. ANBIMA student.

December 10, 2021