Private Pension – See What It Is and How It Works

You, as a Brazilian citizen, have certainly worried about your retirement, haven't you? It is constantly changing.

However, have you ever heard of Private Pension? It can basically be considered a retirement in which its issuance is not the responsibility of the INSS.

Social security, in fact, can be considered the construction of an extra income for future projects, that is, a guarantee that in the future you will have financial stability.

However, if you are interested in knowing more details about how it works, keep checking all the content that we have prepared for you from this brief article.

Private Pension - What is it and how does it work?

Briefly explaining what we highlighted earlier, we can reinforce that Private Pension is not something that is linked to the INSS.

The National Institute of Social Security is actually a government agency that ensures you receive certain monthly amounts depending on your conditions.

Private Pension, therefore, is an “investment in your future”, since from it, you can finally achieve a better value in your retirement.

Therefore, it is an investment for the future.

In general, we can establish two types of Social Security.

The first is the so-called “closed”, which in turn allows companies to offer pensions only to their employees.

For this to happen, a foundation is needed.

The second type of pension plan is open, to which everyone has access available, either through banks or through brokers.

Open pension and its conditions

If you have an open private pension plan, you (as previously mentioned) can make your own investments.

However, when you arrive at the bank to carry out such an operation, two acronyms will appear, which are: PGBL and VGBL.

Their respective meanings are: Plan Generating Free Benefits and Life Generating Free Benefits.

Obviously there are conditions that differentiate them, however, we must say that they are not many.

Regarding the Free Benefit Generator Plan, it is aimed at those who file their income tax return.

With this, the amount by which you will enter your account in a given month can be deducted.

This, over time, can mean that you will have the money you paid in tax over the year back.

In the case of the other type of Private Pension, we must say that its focus is mainly on people who do not declare income tax.

In general, over time, you may be able to make contributions with it, without certain fees being deducted.

Private Pension - Main features

Private Pension is obviously not something totally advantageous. There will always be conditions you should pay attention to.

The first of these, for example, is the high rate applied to it.

The rate in question can either be in relation to the exit rate at the time of redemption, or else the loading rate.

Therefore, when you are going to take out a pension plan, remember to discuss the additional amounts that will be applied.

Taxation is also another important thing to pay attention to.

It can be classified into two categories, namely: regressive or progressive.

If you make a withdrawal within two years, the tax rate will be 35%, but from this period onwards, it will decrease to 10%.

Regarding the profitability of Social Security, it really exists.

However, there are other means of earning income with a higher profit margin and also, with less fees.