What is Private Pension and how does it work?

THE private pension also has the name “supplementary retirement”, as it is an excellent option for those who want to supplement the retirement received from the government, which is paid through the National Institute of Social Security (INSS).

Summary with the topics presented:

But after all, what is private pension and how does it work?
Differences between private pensions and social security;
What is the return on private pensions?
What is the best private pension plan?
How long do I have to pay and what is the contribution amount?
Conclusion.

But after all, what is private pension and how does it work?

Although it was regulated in 1977 by Law No. 6,435, this type of investment became more famous after some changes made through the Social Security Reform.

The reform was carried out mainly because there are currently 54 million people over 50 years old, according to IBGE projections.

In other words, the country's population is aging and the State is not able to provide retirement benefits for everyone.

However, several economists warn that the changes will not be enough to balance the government's accounts.

The same experts state that it is possible to carry out a new reform in a few years.

Therefore, the path for Brazilians to public retirement has become more difficult.

Taking this uncertainty into account, in the first half of 2020 there were already 13.5 million individuals investing in supplementary retirement, whereas in the second half of the previous year there were only 11.2 million.

That is, Brazilians began to invest more in supplementary pensions.

But, the What is private pension and how does it work?

Supplementary retirement works like a fund made available by financial institutions, in which the person defines an amount and term to contribute monthly.

At the end of the defined term, it is possible to receive the amount in full, monthly, temporarily or even for life (the latter works like a pension).

How does private pension work?

If you still have doubts about the security of this type of retirement, know that it is regulated and monitored by Superintendence of Private Insurance (Susep), a federal agency.

And to actually explain how it worksin private pension we must highlight its types:

First, there is the closed supplementary retirement which is also called “pension fund”.

Only a few companies offer this type of retirement to their employees, in addition to professional associations that provide it to their members, such as lawyers.

On the other hand, the open supplementary pension It is individual and aimed at any audience that wants to have a guarantee for their future.

This type of retirement is also recommended for companies that intend to provide pension benefits to employees.

In this case, the contract is made through a financial institution, an independent pension fund manager or an investment broker.

Differences between private pensions and social security

In our country, Social Security or Public Security is administered by the Federal Government and is seen as a right of every citizen.

According to article 6 of the 1988 Federal Constitution, this benefit is guaranteed to the worker from the moment he meets the requirements for retirement.

As a result, it is mandatory insurance for all workers with a formal employment contract.

Therefore, contributions are deducted monthly from the worker's salary.

Otherwise, the self-employed professional must make the payment using the Social Security Guide or GPS.

In this sense, note that in social security, contributions are mandatory and it is necessary to meet requirements such as contribution time and minimum age to obtain the benefit.

In the case of private pension plans, it is not necessary to meet any type of requirement, as the amount can be withdrawn at any time, as long as the person assumes the possible losses of the amounts that were projected and established during the contracting process.

In this way, supplementary pension plans are more flexible, as it is possible to negotiate the conditions for receiving the amount.

What is the return on private pensions?

Unfortunately it is not possible to know what is the private pension income without contacting the financial institution of your choice.

As with other types of investment, the accumulated value depends on three main factors:

Amount contributed over the years

Each person who applies for supplementary retirement has different conditions.

While one individual's contribution is R$$100, another is able to invest R$$10,000.

In this sense, the more you can save and invest, the better the results will be in the future.

Return on investment

The moment you define the plan of the private pension, you also need to choose where your money will go, that is, the investment fund.

Each fund has a different technique, whether conservative or riskier.

A tip before defining the type of investment would be to define your investor profile:

To make the decision easier, think about how long you intend to invest and the risks.

For example, the fixed income It is an interesting investment fund for those who do not want to take risks and want to invest for a short period of time.

This is the profile of a conservative person, but note that investing in a fixed income fund does not have a high return when we think long-term.

As an advantage of investing in this fund, understand that the return will be predicted at the time of investment, making risks minimal.

Furthermore, be aware that Brazilian legislation allows the application of 70% from pension funds in variable income (actions).

As the name suggests, the return varies, making the risk greater.

In other words, funds with a high allocation to variable income are ideal for people who don't mind taking risks and aim for long-term returns.

This is because it is not possible to know how much the money will yield.

Despite this, keep in mind that each investment fund has its own rules and benefits.

Therefore, research is essential to define which profile fits you and ensure the best possible returns.

Fees and taxes

An example would be the supplementary pension administration fee that is charged every year as a percentage.

The amount obtained through the fee is used to cover the fund's expenses and costs, such as the remuneration of managers who select and manage the portfolio.

Therefore, the administration fee is normally between 2% and 5% per year, although it may vary depending on the type of application made.

However, this is not the only fee or tax that is charged because it may depend on the plan and fund you set up.

What is the best private pension plan?

Defining a plan is important because it is difficult to modify it after investing.

So, understand below what the main plans are and which one will best meet your expectations:

First, there is the PGBL or Free Benefit Generating Plan, aimed at investors seeking long-term returns.

This way it works in two steps: the accumulation of the amount to be invested and the redemption of resources.

This type of plan is ideal for those who declare Income Tax using the full model.

This is because it is possible to deduct up to 12% of the annual gross taxable income from the IR calculation base.

And to define what is the best private pension plan, we must also highlight the VGBL or Free Benefits Generator Life.

This plan works like life insurance with survival coverage, as the investor receives all the funds invested over time.

It is also divided into two phases: the accumulation of the amount and the receipt of the benefit that has been accumulated.

Investors seeking fixed income, seeking greater peace of mind for retirement, generally invest in this plan.

Therefore, if you have income exempt from Income Tax and/or file your Annual Declaration using the simplified model, this is probably the best plan for you.

To better differentiate the plans, check which profile each one is recommended for:

PGBL:	VGBL:
Intend to invest up to 12% of your annual gross income in private pension plans;	Intend to invest more than 12% of your annual gross income in private pension plans;
Make a complete income tax declaration;	Makes simplified declaration;
Contributes to Social Security;	Contributes or not to Social Security or the Special Regime;
He is retired.	It is exempt from income tax.

To simplify everything mentioned above, think about the following:

Define the plan by checking your Income Tax return template.

And in addition to the plans, also choose between the income tax tables:

Bradesco Private Pension

As an advantage, this bank allows you to change the payment date and method, the plan's due date, and reduce the contribution amount.

If you face an emergency and need money, understand that resources can be recovered at any time you prefer.

Through internal portability, it is possible to modify the plan and also your investment fund profile.

An interesting tool on the company's website is the tax benefit simulator, which allows you to understand exactly how much you need to invest to secure the tax incentive, with a deduction of up to 12% from your annual gross income with the PGBL.

Depending on the plan you choose, you can compete for prizes from the bank.

Ultimately, you invest in your future and earn Livelo points that can be converted into services and products.

Caixa Private Pension

According to the company, there is no need to pay any type of fee to start investing in retirement plans.

In fact, exit fees decrease each month the customer maintains the plan.

Another great benefit would be the possibility of contributing a small amount, considering that the minimum amount is R$$35.

There are also benefits for women such as private pensions, gynecological funds, and pregnancy benefits, as well as free assistance for children.

Santander Private Pension

To ensure your peace of mind in the future, understand that Santander offers Prev First Steps, social security for your children, grandchildren and nephews.

There is also the Protected Future, which would be a financial reserve to protect the family.

And if you already have a pension plan with another institution, you can port it to Santander.

Finally, your plan simulation can be done through the digital environment.

Nubank Private Pension

One of the advantages of Nubank Private Pension is its flexibility!

It is possible to either invest in Nu Invest for the first time or bring your pension plan to the financial institution.

Furthermore, all available plans are in partnership with Icatu Seguros. To sign up, customers must have a Nu Invest account and complete an online simulation.

How long do I have to pay and what is the contribution amount?

The minimum investment period for a pension is 8 years.

In other words, a person who intends to retire at 60 years of age must start investing in retirement by the age of 52.

It is generally recommended that you invest as soon as possible to ensure greater peace of mind in the future.

As we mentioned above, talking about the advantages of private pension At Santander, there are even plans for children, for example.

However, this does not mean that it is not worth investing in retirement when you are older.

Of course it's worth it, you just have to adapt your plan according to the time you have available.

In this sense, when choosing, pay attention to the minimum initial contribution amount.

This value represents the minimum amount that can be invested in a given plan.

Please note that some companies allow investments of low amounts, starting from R $1.00, up to larger amounts such as R $500, R $1000 or R $10000.

Conclusion

We hope you have been able to define the best plan, as well as a financial institution for investing in your private pension.

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Life and Finance

Luciana Sampaio December 6, 2021