Opinion – From Grain to Grain: Find out if it is worth taking advantage of the PGBL contribution this year

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The year is coming to an end and with it, the deadline to take advantage of the tax benefits of contributing to a supplementary pension plan of the PGBL type. However, this benefit does not apply to everyone. I explain who should take advantage of this opportunity to pay less income tax and still earn more.

Regarding the tax aspect only, there are three major benefits of contributing to a PGBL-type plan: postponing the payment of IR, earning income on this postponed IR and paying less IR in the future.

There are other benefits, for example, absence of “eating quotas”, reduction of succession costs, absence of taxes on portability, but I will focus on the three main ones mentioned above, as they are exclusive to PGBL-type products.

As I mentioned, these benefits are not for everyone. However, don’t worry if it doesn’t work for you, that means you have another benefit. Sometimes even bigger.

When making the annual income tax return, there are two options: the simplified discount or the complete return.

In the simplified discount, the taxpayer replaces all permitted deductions with a deduction of 20% of the amount of taxable income, limited to R$ 16,754.34. Allowed deductions are, for example, contributions to pension plans, health, education and dependent expenses, among others.

Thus, if you have taxable income of up to R$ 83,771.7 thousand in the year, you probably do not qualify to use the PGBL benefit. Those who do not contribute to the INSS (or to their own regime) are also excluded, unless they are already retired.

If your income exceeds the amount above, you begin to qualify. However, it is still necessary to check whether the amount of deductions you have exceeds the R$ 16,700 mentioned above.

The deduction allowed for contributions to private pension plans of the PGBL type is limited to 12% of taxable income.

For the calculation of taxable income, you must consider, in addition to other sources of income, income from work, excluding those referring to profit sharing and thirteenth salary.

The table below presents four examples of how much PGBL contribution promotes gains thirty years later.

For this example, a real interest rate of 6% per year was considered, that is, above inflation. Thus, you will understand how much this application in the PGBL would be equivalent to today’s values ​​in an increase in your current salary.

If you earn more than R$83,700 every year, you have the option of making a simplified or complete declaration. If you do the simplified one, your deduction is limited to R$16,700 as I mentioned above.

Therefore, the gain of choosing the complete declaration is what you can deduct in excess of this limit of BRL 16.7 thousand.

In all cases, I considered that there are no other deductions from gross income, that is, I disregarded possible deductions from payments to official social security, health and others. All contribute to the official social security, but health and other expenses may not exist.

Therefore, the gain shown is even greater, if there are more deductions and they are considered.

In the example, if you earn BRL 100,000 a year and have no other deductible expenses, it would make no sense to contribute to a PGBL-type pension plan.

Assuming you have no other deductions, only if your taxable income exceeds R$ 140,000 per year, you start to have a gain for investing in PGBL in the limit of 12% of your income.

Remember that there are two gains. One for paying a lower IR rate and the other for earning income on the postponed IR.

These two earnings, if applied for thirty years at the real interest rate of 6% per year, are equivalent to an increase in salary for each year as shown in the last line.

Therefore, for those who qualify, the PGBL application is essential and should be taken advantage of before the end of the year.

Michael Viriato is an investment advisor and founding partner of Investor House

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