The danger of saving with the INSS rate – 02/20/2024 – Rômulo Saraiva

When it comes to saving, many people don’t hesitate to have social security protection while paying less. In the case of an individual taxpayer —a self-employed professional who carries out paid work on his own— or an optional insured person —who does not work but wants to have INSS protection—, the general rule requires that the payment percentage corresponds to 20% of the respective salary. But there is the possibility of reducing this monthly cost to 5% or 11%. The problem is the implications of this decision, ignored by many people. Paying less means having restrictions on the list of social security benefits.

A financial crunch or the need to reduce domestic costs leads to a reduction in the social security contribution rate. It’s better than paying nothing and losing coverage. But the migration from the normal plan to the simplified one, with cheaper conditions, demands caution and, above all, attention to what may happen in the future. In their desire to pay less, there are individual or voluntary taxpayers who are unaware of the consequences of their actions. And he ends up finding out the day before he retires, if he can.

The simplified plan of 11% or 5% is more affordable, but it is good to be careful to avoid unpleasant surprises, such as not being able to retire based on contribution time and limiting your retirement to necessarily a minimum wage. Or not being able to record the time (reciprocal counting) in another pension scheme.

Those who can pay the 11% rate on their contribution salary are optional insured people and individual taxpayers who work on their own, without a working relationship with a company or similar. If you pay INSS with codes 1163 (individual taxpayer), 1180 (quarterly individual taxpayer), 1473 (monthly optional) and 1490 (quarterly optional), it means that the payment is made at a rate of 11% and you will not be entitled to retire due to contribution time and the value of your benefit will be one minimum wage, even if in the past there were payments with higher wages.

The payment of 5% of the contribution rate applies to individual micro-entrepreneurs and optional insureds, but this is a more restrictive form. This would be the optional low-income insured, without their own income and who dedicates themselves exclusively to domestic work within the scope of their residence, as long as they belong to a low-income family registered in the Single Registry. If you pay INSS with the codes 1929 (optional low monthly income) and 1937 (optional low quarterly income), it means that the payment is made at a rate of 5% and there will be restrictions on the list of retirement rights.

If the insured person has inadvertently paid at a rate of 5% or 11%, there is a possibility of regretting it, in order to have a retirement based on contribution time or a retirement not limited to the minimum wage. But it is necessary to top up until you reach 20%. Those who had been paying at a rate of 11% will need to compensate the INSS by 9% in order to reach the 20% of the normal plan. Those who paid 5% can top up their monthly contribution at a rate of 15% to leave the simplified plan.

Depending on your financial situation and pension planning, simplified rates can fit perfectly and even help you make your dream of retiring come true. It is only necessary that whoever is paying a social security contribution is well aware of what this could entail in the future. If you regret it, take steps to supplement the missing amount.

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