Born, growing and now surviving: an analysis under the look of private pension retirement

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DOI: ESTE ARTIGO AINDA NÃO POSSUI DOI SOLICITAR AGORA!
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ORIGINAL ARTICLE

COSTA, Raimundo Nonato Vieira [1], ARAÚJO, Jamille Carla Oliveira [2], SILVA, Leidian Moura Da [3]

COSTA, Raimundo Nonato Vieira. ARAÚJO, Jamille Carla Oliveira. SILVA, Leidian Moura Da. Born, growing and now surviving: an analysis under the look of private pension retirement. Revista Científica Multidisciplinar Núcleo do Conhecimento. 04 year, Ed. 06, Vol. 03, pp. 82-109. June 2019. ISSN: 2448-0959

SUMMARY

Brazil is experiencing a time of economic crisis, reforms and uncertainties. Given this scenario in which the country’s economy is located and the profound changes imposed by the government, Social Security raises doubts regarding the guarantee of retirement. Thus, the study sought to conduct a study on Private Pension: an analysis of retirement modalities based on pgbl and VGBL plans, answering the following item: Which private pension plan is most advantageous for retirement, PGBL or VGBL? The main objective of the study is to identify between the PGBL and VGBL plans, the most advantageous as a retirement modality. Thus, it was agreed: to characterize the pension plans distinguishing them from each other; calculate the basis of pension plans for PGBL and VGBL and; compare the PGBL and VGBL private pension plans as a form of retirement, taking into account the primary variables. To achieve the objectives, several methodological procedures, bibliographic review, exploratory research, application of comparative processes based on variables with direct influence, actuarial projection between the two modalities studied, developed based on two values, of R$ 400.00 and R$ 800.00, in order to clear the calculations of social security. Data and information were collected in bank X. Monthly values were simulated in four contribution periods. The results found by the comparative method showed that both the PGBL and the VGBL have advantages, and that the choice of the most advantageous depends on the financial size, the investor’s profile and the definition of the variables.

Keywords: Investments, Private Pension, PGBL, VGBL.

1. INTRODUCTION

Over the years, the Brazilian Social Security System has been causing structural problems in public accounts, due to aspects related to the degree of human longevity, changes in work and the effects of the Federal Constitution of 1988, which has been causing the financial and actuarial imbalance of the Brazilian Public Pension. (Afonso; Fernandes, 2005, p.297, Bogoni; Fernandes, 2001, p.117).

This scenario makes it difficult to realize the dream of those who crave a quiet and dignified life after the period of work. Even more so with the profound changes imposed by the government to align the country’s economy, the Social Security area, which according to several authors (Ferreira, 2006, Cardoso et al. Bogoni(2006) Fernandes, 2011, Coelhos; Camargos, 2012, Campos; Souza, 2016) is a scenario of uncertainties, raising doubts regarding the guarantee of the worker’s retirement.

Thus, this paper makes a study on Private Pension through an analysis of the modalities of retirement, Free Benefit Generating Plan (PGBL 1) and Free Benefit Guarantee Life (VGBL 2). The overall objective is consolidated in identifying among the PGBL or VGBL plans, the most advantageous as a retirement modality.

Moreover, the motivation of the study did not come from the evaluation of market growth, more to obtain knowledge in the area and thus to foster relevant information, allowing as an accountant, to assist investors and or savers in decision making, based on evidence that can elucidate the guiding item of the research: Which modality of private pension, more advantageous for retirement , PGBL or VGBL?

Finally, it is hoped that the results achieved can contribute to the enrichment of the literature within the theme on which the study is based, while being able to promote greater guidance and motivation on how to invest in the present, to ensure a promising future, with economic balance and quality of life guarantee.

2. SOCIAL SECURITY

The industrialization process of the early 16th century boosted the social security sector. The labor guarantees spurred the creation of many institutes of “retirements and pensions”, which later in 1966 were incorporated into a single entity called the National Institute of Social Security (INSS) which remains to this day and that underscores all legally admitted workers.

Years later, on August 26, 1960, the National Congress approved Law 3,807, which provides for the organicity of Social Security and article 1 establishes the aspect of its purpose:

The Social Security organized in the form of this law, aims to ensure to its beneficiaries the indispensable means of maintenance, due to advanced age, incapacity, length of service, imprisonment or death of those on whom they depended economically, as well as the provision of services aimed at the protection of their health and contribute to their well-being. (BRASIL, art. 1º, Lei 3.807, 1960).

From this, the imbalance of the social security calculation, such as the growth of informal work and the poor governance with regard to the application of the social security fund. Regarding poor governance, it is noteworthy that there is a legal deviation from the purpose of the social security fund (George, 1996). There was a change in the provision of the Federal Constitution allowing the use of 20% of the fund to pay expenses other than Social Security and also, in September 2016 this percentage was increased to 30%. (Wagner et al., p. 7, 2017).

This unfolding of the fund contributes to the fragility of the Social Security System, in addition to forcing the government to apply an excessive tax burden on the worker, which differs according to the modality of Private Pension chosen.

3. PRIVATE PENSION

The Pension Plan is also known as complementing this Pension is the result of the evolutionary process of mutual relief and pension institutes, such as previ-caixa 1904, which functioned as a montepio cash and the main purpose was the payment of pension to the employee’s family after his death. In 1977 this pension was regulated by Law 6,435. (Brasilprev, p. 2. 2017).

As the name implies, the Supplementary Pension is a reserve fund, a savings that will serve as a future rescue or even transformed into pension payment to complement social security.

According to a study on the subject, it should be noted that, although this Pension Fund was regulated in 1977, it only reached effective growth in 1990 with the stability of the economy by the Real Plan. Since then, it has become increasingly sought after by savers and or investors who wish to take their life project off the paper.

According to Kato (2000), Supplementary Pension is seen as a solution to the official social security crisis, where each country structures and regulates the private plans to be adopted according to its particular development needs.

In Brazil, constitutional amendment nº 20 of December 15, 1998, Article 202 and its paragraphs are attributed to the following wording:

Art. 202. The Private Pension scheme, complementary and organized autonomously in relation to the general Social Security regime, will be optional, based on the constitution of reserves that guarantee the contracted benefit, and regulated by complementary law.  (Author’s griffin) (Constitutional Amendment nº 20 of December 15, 1998).

From this information it is understood that the main difference between Social And Private Pension is the fact that in the first, all workers contribute to the formation of the fund of those who will retire (simple allocation system), in the second, the formation of the fund is individual and in the end the beneficiary receives the entire amount accumulated in the period. (Garcia, 2003).

Private or Supplementary Pension is classified into two models: The Open Private Pension – PPA and the Closed Private Pension – PPF (Kato, 2011). The PPA covers plans that are marketed by Banks and Insurers, which can also be acquired by any individual or legal entity concerned, (object of study of this work). PpF, known as Pension Fund Pension Pension Pension, works with plans targeted at companies, developing benefit plans for their employees. (Kato, 2011, Bogoni; Fernandes, 2011).

It should be noted that this Private Pension System (Closed and Open) has a certain degree of commitment and organization in ensuring security for its employees, within a solidary and humanistic vision. Undoubtedly, it is a fund that aims to compensate for the productive and financial ineptitude of its members.

The modalities of Private Pension are composed of the Free Benefit Generating Plan (PGBL) and the Free Beneficial Generating Life (VGBL). Both are defined at the time of contracting the plan and is assigned in the event of the taxpayer’s death, the accumulated amount, financial reserve, goes to the beneficiaries he chose at the time of making the pension plan. (Camargos, 2004, Bogoni; Fernandes, 2011, Kato, 2011).

In order to develop a better understanding, it was necessary to discuss about PGBL and VGBL, individually and therefore make the differences of these modalities.

3.1 FREE BENEFIT GENERATOR PLAN – PGBL

The PGBL was created in 1998, is a product of Open Private Pension. This plan allows the accumulation during a period, previously agreed in contract between the operating company and the taxpayer also called participant. The insurer is the trustee of the participant. This when receiving the monthly installment carries out the “financial capitalization regime”. Like any Private Pension Plan, the PGBL has two phases:

The first is the phase of accumulation of capital or capitalization, when the individual is in the active and surplus stage of his life cycle (…) The second phase, therefore, is the payment of benefits, when the individual is in the final stage, dependent and deficient in his life cycle. (Campani, Costa, 2016, p. 4).

Around what is declared, the second phase can be understood as the usufruct itself. That is, the criterion must be chosen by the saver, who can choose to receive at the end of the period and from a certain age all the accumulated amount or even choose to receive a monthly income from the insurer, for a certain time or for life.

As Campani and Costa teaches( 2016, p.6), one of the main advantages of the PGBL is the non-incidence of income tax on income during the contribution time, because the Income Tax is levied only at the time of redemption on the amount and can be postponed to the limit of 12% of the total taxable income of the saver, provided that this is a taxpayer of the official pension.

The administration fee is a cost because it stems from the expenses that the company has to apply the resource. There is also the charge of the loading fee, a kind of toll that the company charges every time it applies money in the plan. This fee may relate at the time of contribution, redemption or both. The two fees vary depending on the plan chosen and the entity contracted to administer the fund. (SUSEP, 2017).

As the occurrences of the generating event are applied some regimes. Table 1 summarizes the incidence of these regimens on benefits.

Table 1 – Incidence of Benefits Schemes

BenefitSIMPLE BREAKDOWNBREAKDOWN OF HEDGE CAPITALCapitalization
Pecúlio by DeathYesNoYes
DisabilityYesNoYes
Retirement incomeNoNoYes
Pension IncomeNoYesYes
Disability IncomeNoYesYes

Source: SUSEP, (2017).

Table 1 shows that the Capitalization Scheme focuses on all benefits, which is nothing more than the profitability of the resource, based on a technical structure, to generate the amount to be paid to the beneficiaries in the respective period.

The “Simple Breakdown System” 5, focuses only on the Death Tax And the Disability Tax, given the inability of the participant to produce revenue in both events. The “Breakdown of Coverage Capital 6“, focuses only on Pension Income and Disability Income, that is, the capital accumulated by the investments should be sufficient to cover the provisions of benefits that occurred in the period. (Bogoni; Fernandes, 2011, Kato, 2011, SUSEP, 2017).

Finally, it is concluded that, according to studies conducted on this subject, the PGBL plan has no guarantees of income and is recommended for the participant who makes the complete declaration of income tax.

3.2 LIFE FREE BENEFIT GENERATOR – VGBL

THE VGBL is a complementary pension product created in 2002. This plan has a life insurance feature, but can also be considered a retirement plan, given the option that the participant has to decide at the time of hiring the investment or in the redemption of the investment. (Ferreira, 2006).

It should be emphasized that, in the case of income tax, taxation focuses only on income and not on the amount. Another peculiar feature of VGBL is that contributions or premiums paid to the plan cannot be deducted from the income tax of the participant’s Annual Adjustment Statement. Thus, VGBL is best recommended for those who make the simplified annual adjustment statement or for those who are exempt from it. (Almeida; Coimbra, 2008).

This plan, after the deferral period, provides the insured and or participant with a monthly income – which can be for life or for a specified period or, redeemed in a single payment.

The VGBL has more characteristics of a person’s insurance plan than of Supplementary Pension, so the basis for calculating this plan adopts the actuarial plank that takes into account the variable “risk” (Daykin et. al., 1994). However, it is only a feature, but this does not exhaust the possibility of the VGBL turning out to be a Supplementary Pension. (Cazassa, 2005, Gulias Junior, 2005).

4. METHODOLOGY

The research undertaken in this work has a qualitative and quantitative approach adopting the case study as a basis, where it was classified among the banks of the city of Capanema, State of Pará, the one that presented the Pension portfolio and which was in the ranking of the best private pension operators, among them, the Bank X stood out as a source of data collection , for being ranked 3rd in the ranking of the best private pension operators.

It should be highlighted that the Plans under study – PGBL and VGBL, are offered by other financial institutions and insurance companies, with little variation from one bank to another. As a result, data collection in other institutions was disregarded.

After that, procedures were carried out for cataloguing data present on the web sites, informative, informal interviews about plans, simulations of investments and receipts, study and exploration of printed booklet of the simulation of investments in pension plans, adopting for this presentation and analysis of the projections of retirement plans in accordance with the initial standards of accounting, the techniques of projections of financial reserves , present in the studies of Corrar and Theophilo (2015).

The literature review sought information from various sources, in books, information from web sites, scientific journals, from 1994 to 2017 (except laws, decrees and regulations, which did not meet this period), published Scientific Electronic Library Online (SciELO), Thesis Bank of the Coordination of Improvement of the University of São Paulo (USP) and Federal University of São Carlos (USFCAR), Brazilian Institute of Geography and Statistics (IBGE) , Banco do Brasil Pension (BRASILPREV), Superintendence of Private Insurance (SUSEP), in addition to other sources.

We worked with the investments in the Pension Portfolio Banco X start with a monthly contribution of R$ 400.00 up to the amount of R$ 2,200.00. In this study, the simulation considered only two investment values, the initial of R$ 400.00 and another of R$ 800.00 per month, considering them accessible to the middle class, with several contribution periods, the initial time being 15 years and the end of 35 years, with intermediate intervals of 5 years from the initial one.

With regard to the contribution period, from 15 to 35 years, because it is an intermediate range that applies both to those who wish to contribute earlier and to those who decide to contribute late.

Low. The following is (table 2) the representation of the combination age versus contribution time and minimum retirement age.

Table 2 – Combination age x contribution time x minimum retirement age

 

Source: Prepared by the author, (2018).

Table 2 shows that the investment term of the simulation was based on the minimum contribution time for retirement, which is 15 years, both for men and women. In this case, for a male person to have 15 years of contribution, he/she must start contributing 50 years (50+15) in order to retire at the age of 65 (item 1). So, a male who wishes to retire at the age of 65, he may have four combinations of age versus contribution time,( see Table 13, p.43). A female person, to retire at the age of 55, needs to start contributing at 40 so that he has a chance to reach 15 contribution (40+15), item 3.

The amount accumulated at the end of the chosen term is the sum of the annual profitability to which the resource was applied. For study purposes, the rate of profitability was increased to 8% per year. (Magalhaes et. al., 2004).

The amount represents in monetary terms the investment perspective at the end of the contribution period. The amount will receive quantitative treatment, the variable of which will be the participant’s decision alternatives: if they receive the amount at once, for a certain period or lifetime remuneration.

However, because these are investments in the perspective of retirement, the simulations considered the receipt for a certain period and the life expectancy between genders (rounding up to 72 years for men and 80 for women) and also the minimum retirement age that are 55 years for women (special insured) and 65 for men (urban worker).

The simulations in the VGBL were based on calculation the current actuarial table (SUSEP), the application to future value with a profitability rate of 8% per year and in the PGBL and VGBL. For the PGBL, the expected monthly revenue is the quotient of the amount accumulated in the investment period after the expenses incurred, such as the administration fee ranging from 1.9% to 3%, (depending on the operating institution), and loading for the right time of receipt, which was agreed in 10 years for the man and 25 years for the woman.

It should be noted that, for the calculation of the VGBL, the actuarial table was adopted in all simulations, considering the survival rate, in accordance with ibge census data, and that it must be respected for calculation purposes, according to SUSEP guidelines.

The comparison between the PGBL and VGBL plans in the perspective of retirement will be established by choosing the taxation regime chosen by the participant, whether regressive 8 or progressive 9 and the investor’s profile by the way of declaring income tax (IR), since these aspects are of great relevance to the results.

In the study, we chose the progressive form, taking into account the concept “máximax” – Decision Theory, corroborating with Antunes et al., (2015), which recommends the non-probabilistic method known as optimistic criterion, whose objective is to choose the best possible result.

At this point, the comparison by the form of taxation made it possible to achieve the objective of the study, at the moment when it allowed the identification of pension plans in the theoretical framework, as well as the choice of the most advantageous plan from the analyses developed.

The basis of analysis of the calculation of Social Security in vgbl modality follows the lines of the Risk Theory, since it refers to the computation of the actuarial table and the basis of initial calculation of the amount value and its main sources of variations: interest rates, inflation and the political situation. (Rodrigues, 2008)

The next stage of the analysis was the evaluation through the variation of receivables and social security income by gender. To calculate this difference, the VGBL value was decreased for men and women. Thus, the next field of analysis by the difference between male and female incomes, with the purpose of also evaluating the most advantageous plan in the VGBL by gender modality.

For the calculation of Social Security, in the PGBL modality we did not work with other points of reference, for example, the item gender is not a significant variable in this process, because in this modality there is no application of the actuarial table. However, because it is considered different receipt deadlines for men and women considering the minimum retirement age and life expectancy, the calculation basis for this modality (PGBL) contemplated the variable age. Thus, the amount of pgbl was analyzed under two receiving periods, 10 years, if male and 25 years old, if female, according to the analyses.

From the calculation basis adopted in the PGBL and VGBL plans, the results obtained in the projections, after performing the analyses from various perspectives it will be possible to identify the most advantageous pension modality, whether PGBL or VGBL.

The expected monthly benefit of the PGBL was calculated, and income was the quotient of the amount for the right period of 10 years, which represents the balance of the man’s life expectancy, in which he was retired at 65 years. Or for the right period of 25 years, if the taxpayer is female and having retired at the age of 55.

For the VGBL, the process of calculating the monthly income was the product of the amount by the coefficient of the actuarial table for each gender. It is pertinent to explain that in the first moment the comparison took place between the PGBL and VGBL plans, considering the same contribution deadlines and the same periods of receipts (10 and 25 years) in all simulations.

In the second moment, the analysis takes into account the effects of taxation on the PGBL and VGBL plans from the perspective of the investor’s profile, whether with Social Security, without Social Security or with Savings. This comparison included Savings, only as a way to verify other possibilities, however, it does not compromise the merit of the result because this is not the focus of the work. In this part, the summation process (∑) was used as a technique with little detail of calculations, and this part is an integral part of this work in the appendix.

5. ANALYSIS OF PGBL AND VGBL PENSION MODALITIES WITHOUT TAX EFFECT

5.1 PGBL ANALYSIS

In this projection, both men and women have the same contribution time, 15, 20, 25 and 30 years. The difference is that the woman has a chance to start contributing earlier, at the age of 25. The man, the minimum age to start contributing is 35 years. From this minimum age perspective, both have the same maximum contribution period as 30 years:

Table 3: PGBL, amount and monthly receipt as a function of time

PlanInstallment in R$V. Future in R$Receipt deadlinePGBL in R$
15400,00105.875,0010882,29
25352,92
20157.477,00101.312,31
25524,92
25220.197,00101.834,98
25733,99
30296.542,00102.471,18
25988,47
15800,00211.744,00101.764,53
25705,81
20314.895,00102.624,13
251.049,65
25440.395,00103.669,96
251.467,98
30593.084,00104.942,37
251.976,95

Source: Drawn by the author. Simulation, (2018).

A participant who chose plan 15 as a contribution time, at the end of the term obtained an amount of R$ 105,875 (r$ 400.00 monthly) or 211,744 (r$ 800.00 monthly). In this projection the man began to invest with 50 years (40 + 15 = 65) and the woman at 40 (40 + 15 = 55), considering that he retired at 65 and she was 55 years old. The amount was then divided by the right time limit for receipt. The man for 10 years and the woman for 25.

In the case of the 15-year contribution period for the investment of R$ 400.00/month, the male participant will receive R$ 882.29 for 10 years and the woman, R$ 352.92 for 25 years. For this comparison, no comparison can be made since the amount was divided by different time frames, with the representation of:

Figure 3 – Accumulated PGBL amount as a function of time (R$ 400.00 and R$ 800.00)

Source: Prepared by the author. Projection, (2017).

Figure 3 shows the amount accumulated over time for monthly investment of R$ 400.00 and R$ 800.00, both applied under the rate of profitability of 8% p.a. At that time, the effect of taxation on investment or the effect of inflation were not considered. Therefore, the investment has a slight inclination, revealing that the longer the contribution time and the amount invested, the greater the accumulated amount.

The analysis of monthly investments in the amount of R$ 400.00 and R$ 800.00, applied at the rate of profitability of 8% per year during the contribution periods of 15, 20, 25 and 30 years, without taxation. Therefore the monthly income is the quotient of the amount for 10 or 25 years, which is the life expectancy of men and women after the minimum retirement age. Taking into account the amount accumulated in the four contribution periods, but all divided by the balance of life expectancy (10 and 25 years) respectively, male and female.

Figure 4 – Expected monthly income for the right term (10 and 25 years)

Source: Prepared by the author. Simulation, (2017).

Figure 4 shows benefit of the application. If a male invested R$ 800.00 monthly with adherence to the plan at the age of 50, accumulated 15 years of contribution to retire with 65 (50+15), this participant will have a benefit of R$ 1,764.53 per month for 10 years. However, if adherence occurs at the age of 35, it will have 30 years of contribution (35+30). At 65 years old the monthly benefit is R$ 4,942.37 for 10 years, that is, the sooner you start investing, the better the remuneration of the benefit.

The results show significant disadvantages for the female taxpayer, considering life expectancy, given the same investment value, the same contribution time, but with different reception times, 10 years for men and 25 for women.

Based on the investment of R$ 800.00 monthly by the 15-year contribution plan, the accumulated amount generates an expected income of 705.81 over 25 years for a female taxpayer. At first it may seem small the contribution R $ 705,81 per month, (if female) for a contribution of 15 years. However, it must not be forgotten that it is private pension, and it is added to the benefit of Social Security, raising the economic power of the taxpayer.

5.2 VGBL ANALYSIS

5.2.1 ANALYSIS VGBL MAN MONTHLY INCOME

As already specified, this analysis takes into account two investments (R$ 400, 00 and R$ 800.00) under the profitability of 8% p.a. within 15, 20, 25 and 30 years of contribution (item 2), without considering the tax effects.

Table 4 – VGBL calculation based on monthly receipt – Man

Initial Age

(1)

Term

(2)

Portion

(3)

V. Future

(4)

AgeGenre

(6)

Actuarial taboo

(7)

VGBL

(8)

Retirement

(5)

5015400,00105.875,0065M0,0039412,91
4520157.477,0065M0,0039614,16
4025220.197,0065M0,0039858,77
3530296.542,0065M0,00391.156,51
5015800,00211.744,0065M0,0039825,80
4520314.895,0065M0,00391.228,09
4025440.395,0065M0,00391.717,54
3530593.084,0065M0,00392.313,03

Source: Drawn by the author. Simulation, (2018).

Table 4 represents the combination of age with the contribution plan chosen for the sum sums to reach the minimum retirement age of the man – 65 years. The amounts taken for monthly investments were R$ 400.00 and R$ 800.00. The future value is the amount of the application at the end of the contribution period applied at 8% of profitability per year, without taxation.

By analyzing the data, the most concentrated monthly values are in the lowest age of adherence (35 years) with the longest contribution periods, 30 years attributing to these values are above the current minimum wage, resulting in a positive aspect, because it makes no sense to invest in the plan to receive monthly benefit lower than the minimum wage.

Table 5: VGBL Variation- Plans x Gender

Initial AgeTermPortionV. FutureAgeGenreActuarial tabooVGBL≠ (R$)
Retirement
5015400,00105.875,0065M0,0039412,91
4520157.477,0065M0,0039614,16– 201,25
4025220.197,0065M0,0039858,77– 244,61
3530296.542,0065M0,00391.156,51– 297,75
5015800,00211.744,0065M0,0039825,80
4520314.895,0065M0,00391.228,09– 402,29
4025440.395,0065M0,00391.717,54– 489,45
3530593.084,0065M0,00392.313,03– 595,49

Source: Drawn by the author. Simulation, (2018).

Table 5 shows the difference between deadlines per monthly contribution range. Between the terms of 15 and 20 years of contribution to the value of R$ 400.00 there is a difference of R$ 201.25. That is, reducing the contribution time by 5 years, represents a decrease in the expected monthly value of 32.77%. A similar event occurs in the contribution of R$ 800.00 monthly. If you contribute for 15 years, the estimated monthly benefit revenue is 825.80. If you contribute for 20 years, the expected revenue rises to 1,228.09. A difference of 32.76% if the contribution time is reduced by 5 years.

5.3 MONTHLY INCOME ANALYSIS VGBL WOMAN

This analysis evidences the expected monthly income for a female participant considering the variables initial age, deadline chosen to contribute, value of the installment and term of receipt for 25 years. The calculation basis takes into account the same criteria adopted in the male VGBL “ceteris paribus10” except for the coefficient of the actuarial table, which for the 55-year-old woman is equivalent to 0.00248, which is the basis for this calculation.

Table 6 – VGBL calculation based on monthly receipt – Women

Initial AgeTermPortionV. FutureAgeGenre

 

Actuarial tabooVGBL
Retirement
4015400,00105.875,0055F0,00248262,57
3520157.477,0055F0,00248390,54
3025220.197,0055F0,00248546,09
2530296.542,0055F0,00248735,42
4015800,00211.744,0055F0,00248525,13
3520314.895,0055F0,00248780,94
3025440.395,0055F0,002481.092,18
2530593.084,0055F0,002481.470,85

Source: Drawn by the author. Simulation, (2018).

This Table 6 shows the expected income of the female VGBL for investments of R$ 400.00 and R$ 800.00 applied at the rate of 8% p.a. within 15, 20, 25 and 30 years of contribution, without the effect of taxation. It is observed that, under these conditions, the amounts referring to the contribution of R$ 400.00 are not attractive, because they were below the minimum wage R$ 262.57, R$ 390.54, R$ 546.09 and R$ 735.42, considered far below the current minimum wage. The amounts resulting from the contribution of R$ 800.00 are only advantageous within 25 and 30 years of contribution, which presented a monthly return of R$ 1,092.18 and R$ 1,470.85.

Table 7 shows the difference in expected vgbl income between the plans. Such a procedure is necessary in order to measure the variation between the values of the benefits.

Table 7: VGBL Variation – Plans x Woman

Initial AgePlanPortionV. FutureAgeGenreActuarial tabooVGBL≠ (R$)
Retirement
4015400,00105.875,0055F0,00248262,57
3520157.477,0055F0,00248390,54-127,97
3025220.197,0055F0,00248546,09-155,55
2530296.542,0055F0,00248735,42-189,34
4015800,00211.744,0055F0,00248525,13
3520314.895,0055F0,00248780,94-255,81
3025440.395,0055F0,002481.092,18-311,24
2530593.084,0055F0,002481.470,85-378,67

Source: Drawn by the author. Simulation, (2018).

Table 7 shows the difference in investment between contribution terms. From the 15-year contribution plan, with a monthly investment of R$ 400, 00 the difference is R$ 127.97. In percentage terms, at a difference of 32.77%. In the investment of R$ 800.00 the difference between the terms of 15 and 20 years of contribution is R$ 689.91, a percentage difference of 32.76%. In this analysis, it is concluded that from one deadline to another the difference represents almost one third of that revenue from the shortest to the longest term.

5.4 VGBL ANALYSIS BETWEEN GENRES

The procedure adopted in this analysis seeks to evidence the distortion of the expected monthly income of the VGBL plan, demonstrating that there are differences due to the actuarial plank and the term of receipt.

Table 8: VGBL Comparison – Monthly Receipt x Genres

PlanPortionV. FutureIDADEGenreActuarial tabooVGBL
Retirement
15400,00105.875,0055F0,00248262,57
65M0,0039412,91
20157.477,0055F0,00248390,54
65M0,0039614,16
25220.197,0055F0,00248546,09
65M0,0039858,77
30296.542,0055F0,00248735,42
65M0,00391.156,51
15800,00211.744,0055F0,00248525,13
65M0,0039825,80
20314.895,0055F0,00248780,94
65M0,00391.228,09
25440.395,0055F0,002481.092,18
65M0,00391.717,54
30593.084,0055F0,002481.470,85
65M0,00392.313,03

Source: Drawn by the author. Simulation, (2018).

Table 8 shows a difference between monthly rents due to the coefficient of the actuarial table that differentiates between man and woman, being advantageous for the former given that the man has a shorter life expectancy. In addition, another factor that contributes to the difference is the contribution time, since the amount was divided by different receipt periods, 10 and 25 years. Thus, the VGBL has a slight advantage for the male participant considering the retirement age and the perspective of life.

Table 9: VGBL Variation – Between Genders

PlanPortionV. FutureAgeGenreActuarial tabooVGBL• Genres (R$)
Retirement
15400,00105.875,0055F0,00248262,57150,34
65M0,0039412,91
20157.477,0055F0,00248390,54223,62
65M0,0039614,16
25220.197,0055F0,00248546,09312,68
65M0,0039858,77
30296.542,0055F0,00248735,42421,09
65M0,00391.156,51
15800,00211.744,0055F0,00248525,13300,68
65M0,0039825,80
20314.895,0055F0,00248780,94447,15
65M0,00391.228,09
25440.395,0055F0,002481.092,18625,36
65M0,00391.717,54
30593.084,0055F0,002481.470,85842,18
65M0,00392.313,03

Source: Drawn by the author. Simulation, (2018).

Table 9 shows the expected monthly income difference of the VGBL between the male and female genders, taking into account the contribution period and the monthly amount invested. Within 15 years of contribution with R$ 400.00 of monthly investment, a female participant will receive R$ 262.57 for the right period of 25 years. The male participant will receive R$ 412.91 for the right period of 10 years – ceteris paribus, presenting an advantage of R$ 150, 34 in monetary terms for men and in percentage terms of 57.26%. The advantage is explained by the difference in the time of receipt and the calculation basis, considering the actuarial table.

5.5 COMPARISON OF EXPECTED MONTHLY REVENUE BETWEEN PGBL AND VGBL

The calculation basis demonstrates the amount of VGBL and PGBL and the expected monthly values considering the male and female genders, which are part of the hermeneutics adopted as a methodological instrument.

This analysis does not take into account the effects of taxation on income, but only the difference in gross gain between the two plans under study.

Table 10: Comparison between VGBL and PGBL

Source: Prepared by the author. Simulation, (2018).

For the female participant, a term of 15 years, the PGBL has an advantage of 34.41% over the VGBL, in monetary terms, corresponding to R$ 90.35. The difference is noticeable when compared to the male gender. Within 15 years, in vgbl the revenue earned for 10 years is R$ 412.91 and in the PGBL, in the same 10 years, it is R$ 882.29, an advantage of 113.68%.

Analyzing the 15-year contribution plan with a monthly investment of R$ 800.00, the VGBL, the female category, has a monthly income of R$ 525.13 and the PGBL R$ 705.81, an advantage of 34.41% over vgbl.

The same occurs when we compare the VGBL, in this the monthly income earned is R$ 825.80 per 10 years with the PGBL, monthly income for 10 years of R$ 1,764.53, an advantage in percentage terms of 113.68%. The comparison between PGBL and VGBL within the same contribution period and different genders, the PGBL is the most advantageous. However, ratifying (Ross; Westerfield; Jaffe, 2002, Didini, 2015) the risks arising from long-term investments, which may be of the most diverse possible circumstances (period of inflation or deflation) cannot be disregarded.

5.6 ANALYSIS OF PGBL AND VGBL PLANS WITH THE EFFECT OF TAXATION

This part of the analysis aims to compare the PGBL and VGBL plans considering the aspect of taxation and the investor profile in three modalities: without Social Security, with Pension or Savings. The taxation chosen for this analysis was the progressive form, since the aspect is comparative between the plans and on the basis that the VGBL does not allow another form of taxation, other than the progressive one.

5.6.1 ANALYSIS OF THE PGBL WITH THE EFFECT OF TAXATION

The comparative aspect of the PGBL plan for the base values of R$ 400.00 and R$ 800.00 takes into account two investors with different profile. One with private pension and one without. This aspect was adopted to verify whether the investor profile has an impact on the outcome of this plan.

The simulation was necessary because the PGBL investor can deduct from the IR up to the limit of 12% of its annual gross revenue. In the simulation with gross revenue of R$ 80,000.00 annually the investment in PGBL was 9,600.00 (80,000 * 12%) equivalent to a monthly installment of R$ 800.00 and in the other, with annual gross revenue of R$ 40,000.00, the investment in PGBL was R$ 4,400.00 (40,000.00 *12%), equivalent to a monthly installment of R$ 400.00.

Table 11 – PGBL Analysis – Taxation x Investor Profile

PGBL
R$ 800,00R$ 400,00
Sem PrevidênciaCom PrevidênciaPoupançaSem PrevidênciaCom PrevidênciaSavings
1Annual income80.000,0080.000,0080.000,0040.000,0040.000,0040.000,00
2INSS (11% x 5.531,31)7.301,077.301,077.301,074.400,054.400,054.400,05
3Investment (12%)0,009.600,009.600,000,004.800,004.800,00
4Net income (1-2- 3)72.698,9363.098,9363.098,9335.599,9530.799,9530.799,95
5IR (aliquota de 27,5% – 15%19.992,2117.352,210,005.339,994.619,990,00
6Portion to be deducted10.432,3210.432,3210.432,324.257,604.257,604.257,60
78% profitability0,00768,00668,160,00384,00334,08
9Return on investment without IR (3+7)0,0010.368,0010.268,160,005.184,005.134,08
10IR discount on income (12%)0,001.244,161.312,360,00622,08656,18
11IR To Collect (5-6)9.559,898.164,059.119,961.082,39984,473.601,42
12Annual tax advantage1.395,84-955,9197,92-2.616,95

Source: Drawn by the author. Simulation, (2018).

This simulation sought to highlight the advantage of the PGBL based on the investor’s profile. Since the criterion of the analysis is the profile of the investor, it was agreed to insert the Savings in the whole of the simulation.

It is observed that, in item 4, net revenue, the value found in the investor who does not have Social Security was higher than that who has Social Security or invested in savings. This is because the PGBL allows to deduct from the IR 100% of the investments made in Social Security. This same criterion also applies to Savings. In this case, the IR will be immediately higher in the investor who did not apply in Social Security. On the other hand, the investor in Savings did not have IR to collect, since this type of investment is exempt from IR. The tax advantage is a relevant aspect in this analysis, as it implies the reduction of the taxpayer’s financial burden towards the government.

5.6.2 ANALYSIS OF THE VGBL WITH TAXATION EFFECT

This simulation follows the same “modus operandi” atotado in the PGBL. The only difference lies in the fact that the rate of 12% of the IR (item 10) focuses on profitability (item 7) and not on the amount as occurs in the PGBL. The criterion of this analysis is intended to determine the net investment in considering the tax on the income of the application in vgbl plan.

Table 12 – VGBL Analysis -Taxation x Investor Profile

VGBL
R$ 800,00R$ 400,00
No PensionWith Social SecuritySavingsNo PensionWith Social SecuritySavings
1Annual income (unproven)80.000,0080.000,0080.000,0040.000,0040.000,0040.000,00
2INSS (11% x 5.531,31)7.301,077.301,077.301,074.400,054.400,054.400,05
3Investment in security (12% or more)0,009.600,009.600,000,004.800,004.800,00
4Net income (1-2- 3)72.698,9372.698,9372.698,9335.599,9535.599,9535.599,95
5Retained IR at source (aliquot 27.5%)19.992,2119.992,210,005.339,995.339,990,00
6Portion to be deducted10.432,3210.432,3210.432,324.257,604.257,604.257,60
78% profitability0,00768,00668,160,00384,00334,08
9Return on investment without IR (3+7)0,0010.368,0010.268,160,005.184,005.134,08
10IR discount on income (12%)0,0092,161.312,360,0046,08656,18
11IR to Collect ( 3-5-6)9.559,899.652,059.119,961.082,391.128,473.601,42
12Annual tax advantage-92,16532,09-46,08-2.472,95

Source: Drawn by the author. Simulation, (2018).

The results obtained in table 12 reveal that among the three investor profiles in VGBL (without Social Security, with Pension and Savings), the best result is the one with Social Security, because it presents the lowest amount for the income tax to be collected (item 11).

Thus, it is concluded that, like the PGBL, the VGBL is more recommended for the investor with a Pension Plan profile. However, when comparing the three investment plans (PGBL, VGBL and SAVINGS), and analyzed under the profile of the investor without Social Security, with Social Security and Savings, there is a slight advantage of the VGBL over the others.

Figure 5 – Tax advantage PGBL and VGBL x Investment profile

Source: Simulation the author (2018).

According to Figure 5, regarding the tax advantage between the PGBL and VGBL plans, considering the profile of the investor without Social Security, with Pension Plan or Savings, it is noted that the modality “with Social Security” presents itself as the most advantageous, both in the PGBL and vgbl, according to Hinz, Turner (1998). However, when comparing the two plans, PGBL and VGBL in the modality with Social Security, the VGBL is more advantageous, since it presents the lowest IR to collect, implying in the reduction of the taxpayer’s burden towards the government.

5.6.3 COMPARISON BETWEEN PGBL AND VGBL PLANS

The form of taxation is one of the differences between the PGBL and VGBL plans, since in the first, taxation focuses on the amount, and in the second, on income. (Brito, 2000, López, Pérez-Fructuoso, Martin, 2009).

This table 13 aims to show that depending on the chosen plan, one can be more advantageous when compared to the other, considering taxation. The form of taxation used was progressive, which adopts the same rate as the individual IR. Because these are comparative aspects, the progressive form of taxation was chosen because the VGBL is not contemplated in the regressive form. For didactic purposes, the table represents only a summary of the calculation base, the values of items 4 to 7, is the (∑) sum of the calculations performed. This procedure was adopted because it considered the existence of a direct relationship of the values with the percentage adopted.

Table 13 – PGBL x VGBL Comparison by Progressive Taxation

Source: Elaboration, projection the author, (2018).

In the PGBL, the rate of 27.5% was applied on the amount (item 3), with the tax amount of this plan (item 5). The deductible portion of the IR R$ 10,432.32 (869.36*12) was deducted. Then, the net value of the PGBL (item 7) was calculated, which is the difference between the items (3 – 5).

For the VGBL, an analogous procedure was used, but with a differential. The rate of 27.5% was applied on income, and from this the deductible portion of R$ 10,432.32 (869.36*12) was subtracted from the net taxation. Finally, net taxation was subtracted from the amount (item 3) obtaining the net value of VGBL, item (6), consistent with Brown, Clerk and Rauh, (2011).

Observing the Table, it is noted that items 6 and 7 show the net values of the PGBL and vgbl, and in all simulations the PGBL values are lower than those of the VGBL. This result confirms the studies by Póvoas (2000), Debiasi (2004), Reis, Darcoso and Vasconcelos (2011) on the comparative aspect between PGBL and VGBL regarding the tax effect, however, disregarding the investor profile.

An investor who adopts risk theory and decision theory, (Rodrigues, 2008; Antunes et al., 2015) should certainly choose to invest in VGBL, considering the progressive form of taxation, because it presents better results when compared to vgbl.

CONCLUSION

Considering the current political and economic situation as Brazil passes, the study on Supplementary Private Pension from the perspective of the advantages of the PGBL and VGBL plans as retirement modalities has great social relevance. The events mentioned above may imply the possibility of the taxpayer thinking of a way to invest in the present to have a less uncertain future with regard to the personal economy and its dependents.

When comparing the PGBL and VGBL plans without the effect of taxation, but considering gender, the PGBL proved to be more advantageous. In another simulation, when considering the retirement age, gender, contribution period and the time for the right time of receipt, the PGBL again proved to be more advantageous, since the variables receipt times (10 and 25 years) related to the other variables contributed to the distortion of the results, revealing a trend of advantage for the PGBL.

In the simulation between the PGBL and VGBL plans considering the effect of taxation and the investor profile in the modality with Social Security, the VGBL proved to be more advantageous because it presented a better tax advantage. Also, when comparing and analyzing the same plans, taking into account the effect of taxation and disregarding the investor profile, the VGBL presented a better advantage.

In view of the above and considering the analyzed aspects, the study proved relevant, ratifying the importance of investing in the present to have a future income as retirement. He also showed that to choose the most advantageous plan, investors and savers must know the various forms and possibilities, associated with the economic and individual profile, and from the advantages found exercise the decision-making power when choosing and hiring a Private Pension plan.

Therefore, the objectives were achieved, but it is recommended to continue the studies, in a more restricted and specific perspective, based on other points of analysis to better assist the decision-making of investors and savers.

REFERENCES

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Campani, Carlos Heitor; Costa da , Thiago Roberto Dias. Pensando na Aposentadoria: PGBL, VGBL e Autoprevidência. Relatório COPEAD. Setembro, 2016. Disponível em: www.coppead.ufrj.br/upload/publicacoes/428.pdf. Acesso em: 11.08.17.

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1. Free Benefit Generating Plan – PGBL- These are pension plans that allow the accumulation of funds for a specified term. During this period, the money deposited is being invested and made profitable by the “insurance or brokerage” company (RODRIGUES, 2008, BRASILPREV, 2016)

2. Free Benefit Guarantee Life – VGBL – is a private pension plan that accumulates resources, which has survival coverage clauses, attributed to insurance for this reason the confusion in investments (BRASILPREV, 2016).

3. Actuarial Risk Management is a process that reduces the risks of risk variables on the bus. (RODRIGUES, 2008, COELHOS, CAMARGOS, 2012).

4. Simple Breakdown System – The contributions paid by all Plan participants in a period, must be sufficient to pay the benefits of events that occurred in that same period.

5. Coverage Capital Breakdown Contributions paid by all Plan participants in a period must constitute the mathematical provisions for benefits granted for events occurring in the same period.

6. Deferral period refers to the period of accumulation of resources – savings.

7. Accounting – is a term used, by accountants and actuaries, to mathematical-statistical methods, which produce specific data or projected according to actuarial risk management (RODRIGUES, 2008, CORRAR, THEOPHILO, (2015).

8. Regressive – long-term contribution, created to encourage the financial reserve, with deduction of the social security portion exclusively at source for income tax, which implies lower retirement amounts.

9. Progressive – contribution over time where the social security portion follows the evolution of salary, declared in the income tax computed as taxable and received from legal entities.

10. “ceteris paribus” everything else is constant “or” everything else is kept unchanged “.

11. Political environment Reform packages. Read: labor, political and social security reform.

12. Economic environment Economic downturn with strong instability index.

[1] Bachelor of Accounting sciences from the Federal Rural University of the Amazon (UFRA); Graduated in Mathematics.

[2] Master in Business Administration, MBA Accounting management, expertise, audit and control, Bachelor of Accounting.

[3] Master’s degree in Public Administration at the Federal Rural University of Pernanbuco (UFRPE).

Posted: March, 2019.

Approved: June, 2019.

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