The Social Security announced this week the availability of a simulator that “offers a perspective on the monthly supplement value to your pension, according to the preferred contribution rate.” This relates to the reform certificates—do you know how they work?
“To join the reform certificates or perform the simulation, simply access the Social Security Portal, menu Work > Retirement and Disability > Public Capitalization Scheme – Reform Certificates,” explains the Institute of Social Security (ISS) in a post shared on Facebook.
The issue at hand is the Public Capitalization Scheme, which is “supplementary, requiring individual and voluntary adhesion.”
“It allows for additional contributions throughout the contributor’s working life, which will be capitalized in an account in their name and converted into reform certificates,” the ISS explains.
What is the Public Capitalization Scheme (RPC)?
On its official website, Social Security explains that, in practice, the “RPC allows voluntary monthly contributions to have an extra supplement in retirement for old age or disability,” and that “each participant chooses their monthly contribution value, which is recorded in an individual, nominative account.”
“This amount is part of a common investment fund—the Reform Certificates Fund. Monthly contributions are converted into participation units in that Fund, known as reform certificates. The final result is an accumulated value intended to strengthen the participant’s social protection,” the site states.
Additionally, the “accumulated value corresponds to the product of the number of subscribed reform certificates by their reference value (or ‘quotation’).”
It is also important to highlight that the “accumulated value can only be redeemed when the conditions for acquiring the right to a pension or retirement for old age or absolute disability are met.”
What is the contribution value to be paid?
According to Social Security, the contribution to be paid monthly is calculated by applying a contribution rate to a value considered as the base of incidence, with the “rate and the base of incidence established at the time of joining.”
The contribution rate is set at the person’s option who is joining:
- At 2% or;
- At 4% or;
- At 6% (if the participant is 50 years or older or is registered as a professional in the culture sector).
“The set contribution base corresponds to the average values that served as the base of incidence for calculating contributions in the social protection system in which the participant is mandatorily enrolled. Each year in January, the incidence base is redefined, taking into account the record of remuneration from the previous year,” explains Social Security.
When is the Reform Supplement received?
The “right to the supplement is acquired the month following the one in which the pension is first awarded or the retirement for old age or absolute disability.”
“If the participant simultaneously benefits from the award of an old-age pension and a retirement pension for old age, the right to the supplement is acquired on the date the first pension is awarded,” states the Social Security website.
