Private Pension Schemes

Voluntary participation

• Anyone can participate voluntarily in the scheme.

General finances

• Fully funded personal pension plans based on contribution payments and capital revenues.

Contribution rates

• Persons provide contributions themselves and decide on the amount of contribution payments and the length of the contribution period.

State support

• Contribution payments (up to 12% of the monthly income) can be deducted from the personal income tax base.
• The investment returns from the funds are not taxed.

• Pension plan providers manage pension funds and pay benefits directly to the eligible person.
• ‘Superintendência de Seguros Privados’ oversees and sanctions the pension schemes, imposing further restrictions to how the funds are to be invested (including a maximum of 49% of the money invested in the stock exchange).

• Conditions are regulated by contract between the provider of the scheme and the insured individual.

Pension payments

• Depend on the term of pension payment (lump-sum payment, fixed-term or lifelong pension) and the technical interest rate (an interest rate derived from actuarial mathematics, used to discount future benefits in order to determine their present value).

Taxation and social security contributions

• Pension payments are subject to income tax; either in a progressive manner (as for any other income) or in a regressive manner (with decreasing marginal tax rates in proportion to the length of the investment). The individual can choose the applicable system.
• Pension payments are not subject to social security contributions.