THE Severance Indemnity Fund (FGTS) The FGTS (Severance Indemnity Fund) is a crucial benefit for Brazilian workers, providing a financial safety net in case of dismissal without just cause, retirement, home purchase, serious illnesses, and other special events. Recently, there has been a significant increase in the amount paid to FGTS beneficiaries, reaching over R$1,200 in some situations. In this article, we will explore how it is possible to receive these increased amounts and how the FGTS can become a valuable source of financial assistance.
What is the FGTS?
The Guarantee Fund for Length of Service (FGTS) was created by the federal government in 1966 with the objective of protecting workers in case of dismissal without just cause, offering a financial reserve for times of need. Employers are required to deposit monthly an amount equivalent to 8% of each employee's salary into an account linked to the FGTS. Over time, this amount grows with monetary correction and interest, becoming a long-term savings account.
How does the FGTS work?
The FGTS (Brazilian Severance Indemnity Fund) is managed by Caixa Econômica Federal and can be withdrawn in various situations, such as:
- Dismissal without just cause: The worker can withdraw the total amount accumulated in their FGTS account if they are dismissed without just cause by the employer.
- Retirement: When a worker retires, they are entitled to withdraw the full amount from their FGTS (Brazilian employee severance fund).
- Buying property: It is possible to use FGTS (Brazilian employee severance fund) to pay part of the value of a property, amortizing the financing or paying it off.
- Serious illnesses: In cases of serious illnesses, such as cancer, HIV, or when the worker or their dependent has a disability, withdrawal from the FGTS (Brazilian severance pay fund) is permitted.
- Death of the account holder: The dependents of a deceased worker are entitled to withdraw funds from the FGTS (Brazilian employee severance fund).
- Suspension of casual work: Casual workers who are out of work for a period equal to or greater than 90 days can withdraw their FGTS (Brazilian severance pay fund).
- Natural disasters: In situations of public calamity recognized by the government, those affected may have access to their FGTS (Brazilian severance pay fund).
Increase in the Value of FGTS (Brazilian Severance Indemnity Fund)
In 2020, the Brazilian government announced a measure to increase the value of the FGTS (Severance Indemnity Fund) for workers. The idea was to inject more money into the economy amidst the COVID-19 pandemic. This was done through the distribution of so-called "emergency withdrawals." Each worker could withdraw up to R$1,045, and this amount was later increased to R$1,100.
However, it's important to note that emergency withdrawals are not the only way to increase the value of your FGTS (Brazilian severance pay fund). The amounts accumulated in FGTS accounts also increase over time due to monetary correction and interest. Therefore, the longer you keep your money in the FGTS, the more it will grow.
How to Receive the Increased FGTS (Brazilian Severance Indemnity Fund)
To receive the increased FGTS (Brazilian severance pay fund), you must be aware of the rules and deadlines established by the government. Here are some important steps:
1. Monitor your balance.
First and foremost, it's essential that you monitor your FGTS account balance regularly. This can be done through the Caixa Econômica Federal website, the FGTS app, or at a bank branch.
2. Be aware of the rules.
Pay close attention to the specific rules for each type of withdrawal, whether due to dismissal without just cause, retirement, serious illness, or other situations. It's important to understand the conditions that apply to your case.
3. Check the deadlines.
Each type of withdrawal has a specific deadline for application. For example, in the case of the emergency withdrawal due to the pandemic, the application deadline has already expired. Therefore, it is crucial to be aware of the deadlines and not miss the opportunity to withdraw the amount you are entitled to.
4. Access the official channels.
Make sure to use official channels, such as the Caixa Econômica Federal website, to request your FGTS withdrawal. Avoid intermediaries or unofficial websites, as this may result in problems.
5. Keep your documents in order.
To request the withdrawal, you will need documents that prove your eligibility for the benefit. Therefore, keep your documents in order and ready to present when necessary.
6. Consult a specialist, if necessary.
If you have questions or encounter difficulties receiving your FGTS (Brazilian severance pay fund), consult a labor law specialist or an accountant. They can help clarify doubts and guide you through the process.
Investing your FGTS (Brazilian employee severance fund): Assess your financial needs and goals.
Before investing your FGTS (Brazilian employee severance fund), assess your financial needs and long-term goals. Ask yourself:
- What is your financial goal? (e.g., retirement, children's education, buying a home, etc.)
- What is the timeframe for achieving this goal?
- How much risk exposure are you willing to accept?
- What is your level of knowledge about investing?
- Your answers will help determine the best investment strategy for you.
Choose an investment option.
Based on your goals and risk tolerance, you can choose from several investment options for your FGTS (Brazilian employee severance fund). Some options include:
- Savings account: The simplest form of investment, but it offers relatively low returns.
- Direct Treasury: Investing in government bonds offered by the federal government, with options for fixed income and variable income.
- Investment Fund: Choose a fund that matches your risk profile, such as equity funds, real estate funds, or fixed income funds.
- Stocks: If you have a long-term investment horizon and a tolerance for risk, you might consider investing in individual stocks or stock funds.
- Real Estate: Use your FGTS (Brazilian employee severance fund) to buy a property, which can be a great long-term investment option.
Financial security and FGTS (Brazilian employee severance fund)
The FGTS (Brazilian Severance Indemnity Fund) is an important financial safety net for Brazilian workers, and the increase in the FGTS amount to more than R$1,200 in some situations is great news for those who need financial support. However, it is essential to be aware of the rules, deadlines, and procedures for receiving this benefit. Monitor your balance, know your rights, and be prepared to act when the opportunity arises. The FGTS can be a valuable tool to ensure financial stability in times of need. Therefore, stay informed and take advantage of the benefits it offers.
See also: FGTS: Anniversary withdrawal, how much can I withdraw?
October 6, 2023
Graduated in Literature – Portuguese/English, and creator of the website Successful Writer, seeks to expand everyone's knowledge with relevant information on a variety of topics, as a writer. At Vaga de Emprego RJ, she provides opportunities and tips on the job market.