Income+ pays off in the long run, but is not very flexible – 01/22/2023 – Market

As of January 30, the National Treasury will make available a public bond aimed at investors who want to save extra resources for retirement. In the opinion of specialists consulted by the Sheetthe new product has advantages and disadvantages, but the balance tends to be more positive than negative.

Among the favorable points of the title, named RendA+, are the simplicity of acquisition and the lower cost in relation to investments with a similar purpose —such as private pension plans.

On the other hand, the product was considered not very flexible, since it does not allow investors to define beneficiaries in case of death or choose how they prefer to receive income after accrual.

Launched at the end of December, Treasury RendA+ will be pegged to inflation plus a real interest rate —currently around 6%, according to the simulator.

The idea is that the investor accumulates values ​​over the years to receive them in the future as a monthly benefit.

Interested parties will be able to schedule monthly purchases of new titles – which would be equivalent to new contributions -, with the possibility of payment via Pix. The minimum amount to start investing will be approximately R$30 and acquisitions will be available from January 30th on the Treasury Direct platform.

Initially, eight conversion date options will be offered, that is, the moment when the investor begins to receive his accumulated income: 2030, 2035, 2040, 2045, 2050, 2055, 2060 and 2065.

The main difference between this modality and other Treasury bonds is in the form of redemption. Instead of receiving the entire accumulated amount at once, the investor will receive a monthly income in 240 installments — that is, over 20 years.

This is a point that bothered experts. For Reinaldo Domingos, president of Abefin ​​(Brazilian Association of Financial Education Professionals) and of DSOP Financial Education, the definition of the redemption period is an “unnecessary plaster”.

“The 20 years take away a little the characteristic of continuous pension. I think this is very bad, because it disregards the possibility of a longer life. It had to be flexible”, he says.

That’s what Rodrigo Correa, investment strategist at BRA BS brokerage, also thinks. According to him, private pension plans —which would be the modality most similar to RendA+— offer other terms for investors, including the option of lifetime income.

“That one [dinheiro] extra that the person began to receive at 60, for example, will end at 80”, he says, emphasizing that this may be a problem in view of the increase in life expectancy of Brazilians.

Flávio Humberto Pretti, financial planner for Planejar (Brazilian Association of Financial Planning), agrees with the criticism, and says that he would hardly give up a product with lifetime income when advising a client.

Simplicity and cost are advantages of RendA+

According to the Treasury, the target public of the new title are workers with income between three and five minimum wages, mainly the self-employed. The estimated potential is 3 million people applying in the new modality.

One of the government’s bets to popularize RendA+ is to simplify the process. Interested parties will be able to invest without the need for intermediaries, simply register on the Investor Portal.

The possibility of payment via Pix and the minimum amount of R$ 30 are also considered attractive for the democratization of the title.

Such facilities pleased Domingos, from Abefin. “The pension [privada] there’s a lot of bureaucracy”, he says. “RendA+ is a product that can and should be consolidated. With the ease of accessing and running simulations, I believe it will overcome a need that Brazilians have: agility”, he says.

But the biggest attraction in the experts’ assessment is the cost. As the Treasury’s objective is to encourage savings for retirement, the rates charged will be more advantageous.

Those who wait to receive all the income within the stipulated period will not pay the custody fee charged by B3, as long as the monthly income is up to six minimum wages (currently R$ 7,272). From that value, the rate is 0.1% on the surplus.

Those who decide to sell in advance will have decreasing rates. From zero to ten years of permanence, the percentage is 0.5% on the redemption value. From 10 to 20 years, the rate drops to 0.2%. Over 20 years up to the maturity limit, the percentage is 0.1%.

Marcia Dessen, Certified Financial Planner (CFP), sees this as a clear advantage over similar products.

According to her, a pension plan, especially for small amounts, is expensive. Some insurers charge between 1% and 2% of management fee per year, which has a relevant weight over the decades.

“Big investors even manage to acquire with a 0.6%, 0.7% rate. The RendA+ is 0.1% or nothing [para quem levar o investimento até o final]”, he states.

However, the cost of exiting before the maturity date can be an obstacle, as pointed out by Michael Viriato, founding partner of Casa do Investidor and columnist for Sheet. According to him, few people manage to make an investment and spend ten years without touching it.

In the case of RendA+, a customer who needs to withdraw the amount after five years, for example, will need to pay a custody fee of 0.5%, in addition to Income Tax.

If this can be a disadvantage, profitability is seen as a positive point by Viriato, especially in the current moment of high interest rates. “The product locks the interest rate for a long period. It will be the longest bond that a Brazilian investor will be able to buy.”

According to the Treasury, RendA+ will yield the contracted rate both in the accumulation and conversion period (20 years).

Beneficiaries and taxation are points of attention at RendA+

The new bond will be subject to taxation similar to other fixed income investments. For redemptions within 180 days, the rate is 22.5%. Between 181 and 360 days, 20%. From 361 to 720 days, the rate drops to 17.5%. After 720 days, 15%.

Rodrigo Correa, from BRA BS, considers that this is a negative point in relation to pension plans. In the regressive table, the IR can reach 10% —five percentage points less than the minimum offered in RendA+.

Dessen, on the other hand, does not see this as a disadvantage. She argues that the management fee for pension plans is levied on the entire amount invested, that is, on capital plus earnings. As the rate on the new Treasury bond is cheaper, the planner believes that the product pays off in the end.

“The counterpart is that the investor will pay 5% more Income Tax, which is not levied on the total [acumulado]but only on income”, he says. “The cost of investing is lower”, he adds.

Another issue is succession. In pension plans, the investor can define beneficiaries in case of death, while in RendA+ the dynamics are the same as in other Treasury bonds.

The holder’s account is blocked and no further transactions are made until the completion of the inventory. During this period, bonds continue to yield normally. Once the inventory is completed, the bonds can be redeemed or transferred to new holders.

For Reinaldo Domingos, from Abefin, this can be a problem, as it ends up entering into an equal sharing that perhaps was not the option desired by the investor.

Despite the caveat, he says RendA+ is worth it. “It’s a great passive income product, as long as the investor doesn’t focus all their resources on it.”