Is Pensions Better Than Savings For What Reasons?

Is Welfare Better Than Savings?

Savings are Brazil’s best-known investment modality. However, in recent years, many people have been opting for private pension. Is a pension plan better than saving?

Thinking about the future

Thinking about the future

Life is not easy for anyone, and we do not know what will happen in the years to come. Therefore, it is fundamental to start planning in the sense of having some guarantee in the future.

Recent news about the gap in the public pension system in Brazil throws some uncertainty about the workers’ retirement.

There is a concrete fear that the system will break, leaving poor beneficiaries who have contributed for many years to come.

Because of this, the option of investing in savings or a private pension plan has become attractive to the population. Mainly as an alternative to social security.

But which is better?

To know whether foresight is better than saving, or the opposite, we will analyze each one separately.

Savings: popular, practical and little paid


For a long time, savings accounts represented the preferred form of investment for the average Brazilian.

The great attraction of this investment is its practicality. The person can redeem the money from the savings at any time, without the incidence of income tax.

In addition, the FGC guarantees the reimbursement of up to R $ 250,000 for the holder of the book in the event of any problem with the bank.

This means that, up to the amount above, the money in the savings is safe even if the bank goes bankrupt.

As for income, the savings yield a maximum of 0.5% per month, which results in just over 6%.

Welfare: long-term forced savings

Welfare: long-term forced savings

Unlike savings, private pension plans do not have a FGC guarantee.

In addition, to make short-term redemptions of a pension plan, you will have to pay high fees.

Another disadvantage is that private pension plans are subject to Income Tax, in both progressive and regressive models.

If you do not have the discipline to make monthly applications, the pension plan is committed to pay monthly.

Is Welfare Better Than Savings?

Is Welfare Better Than Savings?

Comparing the two types of investment, we can conclude that, in general, a pension plan is better than saving.

Savings income is often below inflation. The profitability of private pension plans varies according to the plan, but usually exceeds that of savings. Even with the incidence of taxes.

Of course, in case you opt for social security, try to research and choose a known and trustworthy institution.

+ Which to choose: CDB or savings?

If you live with the possibility of suddenly redeeming the money applied, in an emergency, the savings may still be attractive to you.

Consider investing in a fixed income application. There are several options in the market, with profitability of approximately 11% per year, and guaranteed by the FGC.

The savings have already had their glory days, but they belong to the past.

Now that you know a little more about social security, see also how to do your children’s welfare.