See when it pays to discard INSS retirement wages

Workers who have more than the minimum time required by the INSS (National Social Security Institute) may discard contribution periods to increase the amount of pension they will receive, provided that sufficient payments are maintained for the benefit to be granted.

Created by the Social Security reform, valid since November 13, 2019, the rule of disposal of contributions requires extra care when requesting retirement from the INSS to guarantee access to the best benefit, a citizen’s right.

Calculations by Ieprev (Institute of Social Security Studies) made at the request of the article show situations in which it is worth discarding salaries and others in which it pays to guarantee a more advantageous index in retirement, with more payments. The greater the variation in wages received during the career, the greater the advantage of discarding contributions tends to be.

According to Ieprev consultant Wagner Souza, workers with more stable wages tend to benefit from the use of more contributions to improve the index applied in the calculation of retirement. This is because the value of their average salary varies little when discarding salaries.

In addition, the variation in the pocket is small for those who have little extra work time, as the discard of wages will be smaller. “There is little variation in the value of the initial monthly income when the insured person slightly exceeds the minimum time requirement for granting the benefit”, he says.

Transition

The Social Security reform established that the calculation of pensions is 60% of the average salary plus 2% for each year that goes beyond 15 years (women) and 20 years (men). In other words, having more time to contribute improves the index that will be applied. This calculation is used for old-age pensions and transitions by points and progressive minimum retirement age by contribution time.

However, as the reform also changed the average salary rule and stopped discarding the 20% lowest salaries, withdrawing low value contributions can be advantageous for those who have more than the minimum period. To define the average salary, salary values ​​from July 1994, beginning of the Real Plan, are used. Previous remuneration only counts when calculating the total contribution time.

SEE EXAMPLES AND HOW IT WORKS

The calculations were made by Ieprev (Institute for Social Security Studies) for the following retirement age profiles:

• Men aged 65 years and 30 years of contribution
• Women aged 61 and 30 years of contribution
• Granting of the benefit on 11/18/2021

Two profiles of variation in contributions were considered: with more stable wages and another with more abrupt variations

1- STABLE WAGES

• For policyholders who started from a contribution salary of BRL 200 in July 1994, with an increase of BRL 200 per year
• As the remuneration history is more stable, it was more worthwhile to include more contributions to have a better index in the calculation

For women

• A woman with 30 years of contribution and 61 years of age
• If you use the 30 years of INSS, the retirement will be 90% of the average salary, in the amount of BRL 4,962.20
• With 29 years of contribution, she will have the most advantageous option, of BRL 4,972.59
• Her benefit decreases little by little every year less contribution
• If calculated with periods between 22 years and 18 years, it would be BRL 4,452.59 and BRL 4,054.93, respectively
• Retirement drops to less than BRL 4,000 if they were considered between 17 and 15 years old, with values ​​between BRL 3,748.93 and BRL 3,733.40

For men

• In the case of a man with 30 years of contribution and 65 years of age, the most advantageous option would be with his total time of payments, which would yield a pension of R$4,410.84
• The benefit would be below R$4,000 if 23 years of contribution or less are used
• See below for variations according to the contribution time used

2- VARIATION IN WAGES

• In these examples, half of the contributions were made on the minimum wage (from July 1994 to February 2008) and the other half on the INSS ceiling (from March 2008 to October 2021)
• As there is greater variation in the amounts paid to the INSS, it was more worthwhile to include a smaller amount of salaries

For men

• For a man with 30 years of INSS, 65 years of age and this contribution profile, the retirement at the age of 30 will be R$ 2,977.74, calculated on 80% of his average salary
• If he uses only 15 years of contribution with higher amounts, he will receive R$ 3,860.14, a difference of R$ 882.40

For women

• For an insured with 61 years and 30 years of contribution, with this same value profile, despite having 30 years of payments, the most advantageous option will be with 17 years of contribution, with a benefit of R$3,989.57
• See below for year-to-year variations, according to the contribution time used in the calculation

Source: Ieprev (Institute of Social Security Studies)