Since the approval of the pension reform, the discussion on the private pension for companies it has been increasingly constant, both by corporations that seek to understand how the benefit works, and by employees.
THE private pension appears as an option for many people who want to supplement the amount of future retirement, as well as being a solution for those who are unsure about the retirement process. With this in mind, many companies have invested in the benefit as an attraction for new talent and to generate peace of mind for their employees.
Check out, in this article, what is open private pension for companies and how it can generate short and long-term benefits for everyone.
What is private corporate pension?
Private corporate pension is a pension model offered by companies to their employees as a corporate benefit. The plan can be registered, when there is no sponsorship by the employer, or instituted – when the company contributes to the employee.
According to a recent research carried out by ELEVEN, finances are the main reason for concern for UK residents workers: 71% of respondents say that financial problems afflict more than health, family and work.
Another important point of the study shows that after the pension reform, which took place in 2021, 44% of professionals consider their chances of retiring to be low.
Therefore, this private pension model for companies can also be understood as a concern for the financial well-being of employees, especially since this fund ends up becoming a long-term reserve for the employee.
Proof of this is data from another survey conducted by Onze at the end of last year on trends in corporate benefits. According to the survey, social security is the second most desired benefit by employees earning over BRL 3,000 and the first most desired by those earning over BRL 6,000 – yet another indicator that social security can be a good tool for attraction and retention of talents.
How does private pension for companies work?
This financial contribution can be made through a contribution between the company and the employee (established plan). For example: if the employee contributes 5% of their salary, the company contributes the same amount or a percentage of it.
Employers can also set contribution ceilings on their employees' pensions that are in line with their financial situation.
Contributions made by the company to the employees' pension plan, as well as salaries and bonuses, are considered expenses deductible for IR/CSLL, which can reach 34% deduction.
Another option can be to offer a plan in which only the employee contributes (annotated plan). In this case, the company provides employees with access to social security, but there is no cost to do so.
How does benefit redemption work?
The amount contributed by the employee in the private pension can be withdrawn at any time, respecting the grace period of 60 days counted from the contribution. The amount contributed by the company has a variable period of receipt, which is directly linked to the contract made by the company with the employee.
Generally, this period is from 5 to 10 years of the professional's working time, and he can receive the benefit both in case of contract termination, as in the waiver request. These rules, called dressing, are defined by the company itself.
It is also worth noting that choosing the ideal contract is a very important point of private pension for companies. This is because the contracting company can use vesting rules as a policy for retaining talent, reducing turnover. The model can work as in the example below:
- Employees who have up to 5 years working in the organization: in the event of a possible departure from the company, they can withdraw 100% of their individual contribution, plus 50% of the amount invested by the company;
- Employees who have between 5 and 10 years working in the organization: in the event of a possible departure from the company, they can withdraw 100% of their individual contribution, plus 75% of the amount invested by the company;
- Employees who have over 10 years working in the organization: in a possible exit, they can withdraw the total invested in their pension.
What types of private pension plans?
There are two types of private pension plans: VGBL and PGBL. Each employee can choose which modality best fits their profile.
However, be aware that the decision is made at the start of the contract and cannot change along the way. That's why it's important to pay attention when choosing between the two options.
VGBL – Free Benefit Generator Life
In the Private Pension Plan model VGBL, the person accumulates their investments and their money pays off. When the client stops investing and decides to withdraw his money (investments + income), Income Tax is levied only on income.
In practice, it's like the example: suppose you have a VGBL plan in which you invested $100,000, and that money yielded another $50,000. At the time of making the withdrawal, the Income Tax will apply only on the R$50,000.00, that is, only on the income.
PGBL – Free Benefit Generating Plan
In the PGBL model, the individual is also investing an amount of money, and the value is paid off. The difference in this case is that the Income Tax calculation basis will be on the total: investments + income.
Taking the same previous example: if you invested R$100,000 and the money yielded another R$50,000.00, now the Income Tax will be levied on the total amount, R$150,000.00 (investments + income), and not only on the income.
So is VGBL better than PGBL?
Given the above explanation, apparently VGBL seems to be better than PGBL. Of course, if the calculation basis for Income Tax will be smaller, since it focuses only on investments.
However, other factors must be analyzed in relation to the two models, since the difference between VGBL and PGBL is not only in the Income Tax calculation basis.
In the PGBL model, the taxpayer has the possibility of deducting social security contributions made in the previous year from the IR calculation basis, respecting the limit of 12% of gross income.
As such, PGBL can be a good choice for people who make a full tax return. Remembering that it is always more interesting to reinvest the amount saved with the tax benefit in social security.
What are the benefits of private pension for employees?
The ELEVEN study, which interviewed 1535 people, shows that the financial stress it directly interferes in the productivity of most UK residents professionals. According to the survey, 35% of respondents say they lose focus when they are worried about money.
Also according to the survey, 45% of professionals say that financial stress makes them lose sleep, and 14% say they are more impatient with co-workers.
In addition, with the country's economic instability, there is a concern about how the employee can have a supplementary income. After the pension reform, 62% of UK citizens say they do not feel secure about the possibility of having a comfortable retirement, reveals the same study.
All of this shows that private corporate pensions can be a benefit that helps alleviate employees' financial concerns. Adhering to a good private pension plan for the company can contribute to ensuring financial stability when the employee retires.
For employees who are not used to saving or do not have savings or emergency funds, this pension model is a great solution. Since, by making an amount while he works, he will be able to count on that money for future projects.
How is the monthly pension contribution made?
Contributing to private pension is quite simple. The amount to be deposited monthly by the employee is deducted directly from the payroll.
Employees can also make sporadic contributions whenever they want.
What are the advantages of private pension for companies?
Apart from the tax advantages, companies that offer this type of contribution to their employees have several long-term advantages, including attracting and retaining talent.
In addition, as mentioned above, financial stress directly interferes with the professionals' productivity. Thus, offering this type of benefit reduces employees' concerns about money, improves satisfaction and, consequently, contributes to increased productivity.
Also because it offers some tax benefits, adopting private corporate pensions is a practice that has been growing and becoming a differential and a good attraction for companies, along with health and insurance plans.
Is private pension for companies mandatory?
No, it is a benefit that the company may or may not adopt. That is, it is optional. Corresponding to the general Social Security regime, provided for in article 202 of the Federal Constitution, in Complementary Laws No. 108 and No. 109, of 2001, and in specific regulations.
Therefore, it is optional to offer this benefit to employees.
How to hire a private pension plan for a company?
The open private pension plan can be made through a bank, investment brokerage or independent management company whose role is to analyze the characteristics and profile of the company in order to offer the plan that best suits the needs.
As seen in the article, offering good benefits to employees is a way of taking care of the company's health. Satisfied and engaged employees are more productive and help build a more effective and promising work environment.
Every investment in an organization's human capital always returns in benefits to the company.
If you liked this content, take the opportunity to learn more about the possibilities of corporate benefits that your company can offer. Check out this other article what are the best benefits to offer employees in times of crisis!
THE Eleven believes that the best way to take care of the financial future of employees is to offer a real corporate benefit. Therefore, it was born as the first fintech of financial health and private pension regulated by CVM and Anbima.
Onze's proposal is to reinvent the corporate pension market by offering flexible and personalized plans that suit the needs and objectives of each company.
For this, it offers a 100% digital platform without bureaucracy, diversified funds and specialized money management, in addition to a complete financial health solution, which really makes a difference in the lives of employees.
The unprecedented initiative in the country includes periodic check-ups, individual consultations with experts and a platform with hundreds of videos on finance.
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