Private pension is an option in succession planning

Private pension plans have been used by Brazilians thinking about retirement, but also as a succession planning tool.

The holder can define who the beneficiaries will be in the event of death and, as they do not enter into the sharing of assets, as with other types of investment, the plans are an alternative to cover the expenses of the probate and guarantee the maintenance of the dependents while the division of equity is in progress.

As with life insurance, the holder can allocate amounts to the beneficiaries without harming the rights of the heirs.

By law, 50% of the assets must be allocated to the legal heirs – spouse, children, grandchildren, parents or grandparents.

“It is valid for those who want to leave other goods forwarded and a reserve for the successors who depend financially on the provider”, says Luís Felipe Melo, head of allocation at Davos Investimentos.

There is a judicial discussion as to whether the ITCMD (Causa Mortis and Donation Transfer Tax) should be levied on pension plans.

Last year, the Second Panel of the STJ (Superior Court of Justice) defined that the legal nature of private pension, in the form of VGBL, is insurance.

With this understanding, the collegiate denied a special appeal in which Rio Grande do Sul defended the enforceability of the ITCMD on the amounts invested in VGBL after the death of the contractor.

Despite the decision of the STJ, there is still no pacified understanding on the subject. In general, the courts assess that VGBL, as it is life insurance, does not enter into probate. Therefore, it is exempt from paying ITCMD.

As for the PGBL (Free Benefit Generator Plan), there are judicial decisions that consider that it is an investment and, therefore, would have to charge transfer tax.

The issue ended up in the STF (Federal Supreme Court). In the first half of this year, the ministers recognized that there is a constitutional issue and general repercussions in the extraordinary appeal that discusses whether ITCMD is levied on the VGBL and the PGBL, but there is still no date for the judgment.

For lawyer Marco Antônio Vasquez, from the VRL Advogados office, until the Supreme Court pronounces on the matter, the VGBL is the most suitable, because there is already a STJ precedent favorable to the non-levy of the tax.

“As there is, so far, no final judicial decision, the states continue to demand the tax. Taxpayers who want to avoid collection or who are fined for non-payment should appeal to the Judiciary”, says Vasquez.

The rate, which varies according to each state, is from 4% to 8% of the value of the property left. Furthermore, inventory costs can be between 6% and 10% of the total assets.

It is estimated that, in order to guarantee the payment of expenses with the inventory, the ideal is to have in the private pension about 14% to 18% of the total value of the assets that will be left to the heirs.

“If the family depends 100% on the provider’s income, the calculation that has to be made is one to two years of support for the family, in addition to the inventory costs, in case the holder leaves assets to be shared”, says Melo.

It was with women’s peace of mind in mind that retiree Enzo Antônio Cappellozza, 80, decided to take out a private pension plan three years ago. “It’s a safeguard for her life when I’m not here anymore.”

Considering a person who lives in the state of São Paulo and who has left an inheritance of R$ 100,000, the beneficiaries will have legal costs of about 10% on the assets in the judicial inventory process, representing the value of R$ 10,000.

They will also have to pay the ITCMD, which in the state of São Paulo is 4%. In this case, the total costs involved in transferring the assets would be R$ 14,000. Therefore, the final net amount left over for beneficiaries is R$ 86,000.

“If this same customer had this resource allocated to a VGBL plan, the total amount received by the beneficiaries would be R$ 100,000”, says Luiz Bacellar, CEO of Saks, a private pension application, considering the possibility of no ITCMD charge.

In addition to the tax issue, liquidity is also pointed out as a benefit of the pension plan, as it is not necessary to wait for the inventory to end to have access to the money invested, according to specialists.

On average, amounts are released within 30 days. As for the goods that enter the inventory, it can take up to a year to be allocated to the beneficiaries, if there is no legal dispute between the heirs.

“It’s as if the heirs themselves were the holders of the pension. The transfer takes place through a very simple process. Just take the death certificate to the bank to withdraw the amount”, says Vasquez.

Money cannot be blocked to pay debts

Funds from pension plans cannot be blocked to pay the policy holder’s debts. Unlike other assets that can be used to settle debts of the holder, private pension is similar to life insurance and, therefore, cannot be used to pay debts.

Experts consider that this type of investment should be thought of as an option, especially when it comes to general financial applications. “It is advantageous for those who have investments in fixed income and do not want to be subject to the ITCMD, for example.”

It is worth noting that upon redemption, the beneficiary will have to pay income tax, depending on the chosen plan. The collection of Income Tax varies according to the taxation model defined by the holder at the time of joining the investment, and can be by the progressive or regressive table.

“In the PGBL option, the value offered for taxation will be the total amount redeemed, the money invested plus the income. While the VGBL, it will only be the return earned, excluding the principal”, explains economist and accountant Sandro Rodrigues, from Attend Accounting.

transfer of assets

• Charge of ITCMD (tax on the transfer of assets): rate of 4% to 8% of the total assets, depending on the state. Justice discusses whether ITCMD is charged in pension plans
• Inventory costs: between 6% and 10% on equity

Advantages of the pension plan:

• You can define who the beneficiaries are
• Amount is released in about 30 days