An analysis of plan types, taxation regimes and decisive factors for long-term capital accumulation
Private pension, or complementary pension, is a financial instrument for accumulating resources with a long-term focus, designed to complement public retirement (INSS) or to achieve large financial objectives. Understanding how to start a private pension plan and which option is best for your age and profile is a fundamental step towards individual financial planning. The correct choice depends on a careful analysis of factors such as the Income Tax declaration model, the time horizon for redemption and the investor’s risk tolerance.
This article analyzes the essential components of pension plans, detailing plan types, taxation regimes and criteria for appropriate asset allocation, providing a solid basis for an informed and strategic decision.
Plan fundamentals: PGBL vs. VGBL
The first structural decision when contracting a pension plan is the choice between two modalities: the Free Benefit Generating Plan (PGBL) and the Free Benefit Generating Life (VGBL). The fundamental difference between them lies in the tax treatment.
PGBL (Free Benefit Generating Plan): Recommended for investors who complete their Income Tax declaration. Allows the deduction of annual contributions from the IR calculation base, up to a limit of 12% of annual gross taxable income. At the time of redemption or receipt of income, tax is levied on the total accumulated value (principal + income).
VGBL (Free Benefit Generating Life): Suitable for those who file a simplified income tax return, are exempt or have already reached the PGBL deduction ceiling. Contributions are not deductible from the IR calculation base. On the other hand, upon redemption, taxation only applies to the income received, not the total amount.
The choice between PGBL and VGBL is, therefore, a primarily fiscal decision and must be aligned with the way the taxpayer declares their taxes annually.
Analysis of the taxation regime and investor profile
After choosing between PGBL and VGBL, the second decision-making pillar is the income taxation regime, which can be progressive or regressive.
Progressive Table: The rates follow the same logic as the Income Tax table on salaries, varying from exempt to 27.5%, according to the value of the redemption or the monthly income received. It is best suited for those planning smaller redemptions or who have a shorter investment horizon.
Regressive Table: The rates decrease with the length of time each contribution remains in the plan, starting at 35% for applications with less than two years and gradually reducing until reaching 10% for those with more than ten years. This regime is advantageous for investors with a long-term focus, who intend to keep the resources invested for a period of more than a decade.
At the same time, the allocation of plan resources must correspond to the investor’s age and risk profile.
Young people (longer time horizon): They can take more risks in search of greater profitability, allocating a larger portion of their assets in pension funds with exposure to variable income (stocks, multimarkets).
Investors close to retirement: They should prioritize capital preservation, gradually migrating resources to more conservative funds, with a greater concentration in fixed income.
Fees, portability and plan optimization
The profitability of a pension plan is directly impacted by the fees charged by the financial institution. The main ones are:
Management Fee: Annual percentage charged on the fund’s total assets to remunerate asset management. Competitive rates are essential for long-term performance.
Loading Fee: Percentage that may apply to each contribution (incoming loading) or at the time of redemption (outgoing loading). Many modern plans already exempt the investor from this fee.
Portability is an investor’s right that allows you to transfer the accumulated balance from one plan to another, in the same institution or in a different one, without the need for redemption and, consequently, without the incidence of Income Tax. This mechanism is a strategic tool to seek funds with better performance, lower management fees or to adjust the investment strategy over time, without tax losses.
Deciding on a private pension plan is an analytical process that requires joint assessment of the fiscal profile, time horizon, risk tolerance and operating costs. The correct combination between the type of plan (PGBL/VGBL) and the tax regime (progressive/regressive) forms the basis for efficient capital accumulation. Continuous fee analysis and strategic use of portability are crucial to optimizing results throughout the investment journey. It is recommended that you carefully read the fund regulations and monitor information from regulatory bodies, such as the Private Insurance Superintendency (Susep).
