A private pension It is a reality that must be taken very seriously these days. Many people have already noticed that they will not be able to count on government income for retirement. Even more so in a population that is aging and fewer and fewer formal workers are contributing to the payment of the benefit.
Furthermore, many economists have already warned that the new rules will not be sufficient to organize and establish the government's accounts and reduce the pension gap, and could even lead to a new reform in a few years.
Although private pensions are focused on retirement issues, they can also be used for medium and long-term goals. So, if you want to understand more and especially how to choose the best option for you, check out the article below.
What is private pension?
Private pension, also known as complementary pension, is a type of investment recommended for those who have medium to long-term goals.
Its name is due to the operation of an interesting alternative for those who wish to complete the retirement they receive from the government, which is paid by the INSS (National Social Security Institute), or who simply wish to guarantee a stable financial future without depending on public welfare.
This type of investment became even more interesting after the pension reform, which changed the benefit rules and made Brazilians' path to retirement even more difficult.
Due to the uncertainties, the Mercer consultancy estimated in 2019 that there would be a jump of 25% in the number of Brazilians investing in supplementary retirement, an increase from 16 to 20 million people.
How does private pension work?
In short, it works like this: you sign up for a private pension plan at a bank and this resource will be used as a pension fund.
Each plan has someone responsible for managing the investment portfolio. Therefore, this manager will decide which assets to buy or sell, helping to improve investment returns.
After choosing a private pension, it is extremely important to make an assessment of its potential. Only with these analyzes will you get a plan that best suits your needs.
What are the types of private pensions?
Free Benefit Generator Life (VGBL)
Free Benefit Generator Life (VGBL) works like life insurance that also has pension coverage.
This type of pension is recommended for people who file a more simplified income tax return, or simply wish to invest more than 12% in annual gross taxable income.
Free Benefit Generating Plan (PGBL)
Generally, the PGBL private pension is chosen by the person who files the income tax return and contributes to social security.
Investment in private pensions generates excellent tax results in situations where the money is invested for a long time.
For this reason, the PGBL is recommended for people planning retirement or simply building savings for their children.
When to invest in pensions?
There is no rule about the appropriate age to start investing in private pensions, but the sooner the better. For example, if you want to ensure your children's financial security, know that there are pension plans for your children.
Time is very important for you in this situation: imagine that you are closing the plan when your child is just 5 years old and making monthly contributions until they are 18 years old.
With this money he will be able to go on an exchange program, go to college, pay for an apartment or simply continue investing in a private pension plan to get more income in the future.
Remember that while time is good for investment, private pensions are also an investment for adults or elderly people who intend to accumulate their reserves or realize short or medium-term dreams later on.
After all, now is the perfect time to start planning for the future. The important thing is to start.
Is it worth closing a private pension plan?
If this question had been asked a few years ago, most investment experts would have said that it was not worth closing private pensions because the rates would be high and the applications would be very complicated.
The relaxation of private pension rules made the product more attractive and attracted the attention of managers and investors.
In any case, it is good to keep in mind that you need to research the best private pension plan options and always look for qualified managers.