Brazilian Pension System
In this article, we outlined the Brazilian Social Security system. Get to know the institutions responsible, their main attributions and the benefits provided to the insured workers.
Social Security in Brazil
According to the article 201 of the Federal Constitution the Brazilian government is obliged to provide its insured workers financial conditions to live, once they lose their labor capability. In Brazil, the Social Security system is managed by three institutions:
- Social Security Ministry
- Instituto de Seguridade Social (INSS)
- Superintendência Nacional de Previdência Complementar (PREVIC)
Every month, workers have part of their salaries discounted from their payroll by way of INSS. If the person is employed accordingly to the CLT laws, the INSS contribution is discounted automatically. If he is an independent contractor, he will have dedicate himself part of his salary to INSS, as an individual contributor.
It is important to highlight that only part of the INSS is discounted from the employees' salaries. Another part is in charge of the contracting company, in accordance with the Brazilian labour laws.
How much do the insured workers contribute with Social Security?
Every year, the INSS is calculated based on a different percentage. The rates currently in force are as follows:
1) For registered workers and freelance workers
- Wages up to BRL 1.174,86 - INSS rate at 8%
- Wages from BRL 1.174,87 to 1.958,10 - INSS rate at 9%
- Wages from BRL 1.958,11 to BRL 3.916,20 - INSS rate at 11%
2) For individual and optional contributors
- Income up to BRL 622,00 - INSS rate at 11%
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Income up to BRL 622,01 to BRL 3.916,20 - INSS rate at 20%
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Individual microentrepreneus who only work at home have a special INSS rate, fixed at 5% of the income.
Types of benefits provided
The Brazilian Social Security, through the INSS, provides several types of benefits and aids to the insured workers. Each of the benefits will require a different process of application. Below, you can check the most important of them:
Retirement due to age (Aposentadoria por idade)
Are entitled to the benefit urban workers males at 65 and females at 60 years of age. As for rural workers they can request retirement at the age of 60, for men and 55 for women. In order to apply for the benefit, urban workers must prove 180 monthly contributions to INSS and rural workers, 180 months of work in the fields.
Disability Retirement (Aposentadoria por invalidez)
This benefit is granted to employees who, because of illness or accident, are considered by the Social Security’s doctor physically or mentally unable to perform their work activities or other jobs to guarantee their sustenance.
Retirement due to contribution time (Aposentadoria por tempo de serviço)
Here, the employee decides to take his retirement before achieving the age stipulated in the retirement due to age. This type of benefit can be requested as a whole or in part. Men who have at least 35 years of contribution to INSS and women who have contributed to the institution for at least 30 years can apply to the whole benefit.
Men at the age of 53, with at least 30 years of contribution to INSS and 48 year-old women with at least 25 years of contribution to INSS can apply to the proportional retirement.
It is important to note that the sooner the person applies for the retirement benefits, the less he/she will receive in money.
Special retirement (Aposentadoria especial)
This benefit is granted to an insurer who has worked in prejudicial conditions to his mental and physical integrity. To be eligible for the special retirement, the employee must prove, beyond time work, effective exposure to physical, biological or a combination of harmful agents that he was exposed during his job.
Special retirement can be requested by people who have 15, 20 or 25 years of contribution to INSS, depending on the circumstances.
Sickness Aid (Auxílio-doença)
The benefit is granted to the insured worker unable to perform his job due to illness or accidents. In order to qualify for the benefit, the worker must have contributed to the Social Security for at least 12 months. This period shall not be required in the event of an accident of any kind (for accidents at work or outside of work). To grant sick pay is needed to prove the inability to examination by the medical examiner of Social Security.
Accident Aid (Auxílio-acidente)
It is the benefit paid to a worker who suffered an accident during his work that left sequels, which reduced his capability to work. It is granted to the contributors who have received the sickness benefit.
Reclusion Aid (Auxílio reclusão)
The dependents of the insured who was arrested for any reason shall be entitled to receive this benefit, during the entire period of incarceration. The benefit will be paid if the employee is not receiving salary from the company, sick pay, retirement or any other benefit from INSS.
Pension due to death (Pensão por morte)
It is the benefit paid to the worker's family when he dies. To grant death benefits there is no minimum period of contribution to INSS, but it is necessary that the death occurred while the worker was a contributor to INSS.
Maternity leave (Auxílio maternidade)
Female workers contributing to INSS have the right of a paid leave of 120 paid days because of childbirth. The benefit is also extended to adoptive mothers.
Social Assistance to the Elderly and Disabled
This benefit is destined to people who cannot afford to contribute to Social Security. The people who are entitled to this benefit are seniors from 65 years of age who do not exercise remunerated activity and those with disabilities unable to work and living independently.
Private Security
As many other Social Security institutions worldwide, INSS is in debt, due to a lot of factors. If nothing changes, it is estimated that people with 25 to 30 years now will not be able to receive their retirement benefits once they need. That’s why many workers opt for paying a private pension institution as a way to supplement the income paid by the INSS.
Lots of companies also provide to their employees a private security plan. It works like a long-time financial investment, destined to be a supplementary income to to be added to the payment that the insured people will receive from INSS.
The private security companies are ruled by the Brazilian Complementary Security Secretariat and overseen by the Complementary Security Superintendence (Previc).