Private pension plans have always been known for their tax advantages when accumulating resources for retirement. However, following regulatory changes to VGBL (Variable Annuity Life Insurance), gross inflows into the sector fell by R$157 billion in the 12 months leading up to January, according to data from Fenaprevi (National Federation of Private Pension Funds).
Looking to capitalize on a new avenue for growth following these changes, Bradesco Vida e Previdência is launching a pension product called Proteção a Dois (Protection for Two). It combines death and disability coverage with the creation of a financial reserve for two people within a single contract.
Unlike PGBL/VGBL plans, this proposal is not a retirement income, but rather protects policyholders in case of an accident, functioning more like insurance and not requiring the entire accumulated value to be withdrawn.
At the same time, you have the possibility of redeeming the accumulated value at any time, according to the rules of the contracted plan. Accumulation contributions can be made monthly or in a single contribution. The product is not linked to investment funds and its profitability is fixed at IPCA+2.5%.
“The beauty of the product is that it is about 30% to 40% cheaper than taking out two individual life insurance policies, where one covers the other. In addition, it also creates a financial reserve, like a redeemable insurance policy,” says Estevão Scripilliti, director of Bradesco Vida e Previdência.
The structure deviates from the traditional model that dominates the sector. According to Scripilliti, the pension market today is heavily concentrated on accumulation products with more financial than actuarial characteristics, such as PGBLs and VGBLs.
But, according to him, it wasn't always like that. In the 1980s and 1990s, pension plans looked more like risk coverage, with products focused on lump-sum payments and pensions. It was only later that the market began to concentrate on accumulation plans.
“Our intention is to increasingly complement PGBLs and VGBLs with other possible solutions within the pension system. Risk coverage, with the most creative engineering possible, to meet needs that go beyond retirement and inheritance,” says the executive.
The product caters to a broader audience than the classic image of a couple with children looking to retire or focused on estate planning, which has marked much of the expansion of private pension plans in Brazil in recent years. It targets what in the United States is called DINK, an acronym for double income, no kids , which are couples without children. This profile is growing in the country.
Data from the latest Census released by IBGE shows that couples without children represented 24% of Brazilian households, or 13.9 million families, and became the fastest-growing household composition since 2000.
“If we manage to capture 10% of this addressable market, that would already be quite a lot. And we still believe that this family-oriented profile can grow over time,” says Scripilliti.
Retirement plans go beyond couples to any relationship of mutual financial dependence, such as parents and children, siblings, friends, and especially small businesses with two partners.
At the same time, the launch is a response to a market need to find new originators at a time when VGBL (Variable Annuity Life Insurance) has lost momentum – since it accounts for about 90% of the pension market.
As NeoFeed has shown, the 5% IOF tax on large contributions to VGBL interrupted the industry's expansion cycle and put the pension system in "rob-the-mound mode," with competition more focused on portability and migration of existing assets.
Bradesco understands that the "Proteção a Dois" (Protection for Two) will not compensate for the losses of the VGBL (Variable Annuity Life Insurance) in the short term, a product that is already mature and has significant capital reserves. However, it is the beginning of a diversification that the insurer wants to undertake.
