The Severance Indemnity Fund (FGTS) is a financial protection for Brazilian workers. Created to provide financial support at specific moments in a worker's life, such as in the event of unfair dismissal, the FGTS can, under certain circumstances, be withheld. But do you know when you can withdraw the withheld FGTS? This post explores the conditions and situations that allow withdrawal of this benefit.

Understand the FGTS

First of all, it's important to understand what the FGTS is and how it works. The FGTS was established by Law No. 5,107 of 1966 and is a right of all Brazilian workers with a formal employment contract, governed by the Consolidation of Labor Laws (CLT), as well as rural workers, temporary workers, casual workers, harvest workers, and professional athletes. The employer deposits, in accounts opened at Caixa Econômica Federal in the employees' names, the amount corresponding to 8% of each employee's salary.

When can I withdraw FGTS withheld?

FGTS can be withdrawn in several situations, such as:

  • Dismissal without just cause: This is the most well-known situation of FGTS withdrawal, in which the worker is entitled to receive the total accumulated in his/her FGTS account, plus the termination fine of 40% on the amount.
  • Termination of a fixed-term employment contract: When the employment contract ends, the employee can withdraw the FGTS.
  • Retirement: Workers can withdraw their FGTS upon retirement.
  • Home purchase: You can use your FGTS to purchase a residential property or pay off or repay housing debt.
  • Personal, urgent, and serious need: In cases of public calamity, serious illness, or cancer, the worker or dependent can withdraw the FGTS.
  • Age 70 or older.
  • Death of the worker: In this case, dependents can make the withdrawal.
  • Account inactive for 3 years: FGTS accounts without deposits for three consecutive years can be withdrawn.
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Retained FGTS: When is it Possible to Withdraw?

FGTS funds can be withheld for various reasons, but specific conditions allow withdrawals, even if the account is inactive or the worker does not fall under any of the above conditions. Provisional Measure 946/2020, for example, allowed emergency withdrawals of FGTS funds during the COVID-19 pandemic, demonstrating that the government can establish special withdrawal rules under certain circumstances.

1. Anniversary Withdrawal

One of the FGTS withdrawal options is the anniversary withdrawal, which allows annual withdrawals of a portion of the FGTS balance in the month of the employee's birthday. By opting for this option, the employee waives the right to withdraw the full FGTS amount in the event of unfair dismissal, but retains the right to a severance pay of 40%.

2. Changes in Legislation

FGTS laws are updated frequently, and new withdrawal possibilities may emerge. Therefore, it's important to stay informed about changes in legislation to see if new withdrawal opportunities have been created.

FGTS Balance Inquiry

To plan your FGTS withdrawal, it's essential to regularly check your account balance. This can be done through the FGTS app, available for smartphones, on the Caixa Econômica Federal website, or at ATMs using your Citizen Card.

Important Tips

  • Financial Planning: Before deciding to withdraw, it is important to consider the need and plan how to use the money, especially if you opt for the anniversary withdrawal, which implies the loss of some rights in the event of dismissal.
  • Registration Update: Keep your registration data updated with Caixa Econômica Federal to avoid problems when withdrawing funds.
  • Consulting: If you have any questions, seek specialized advice or contact Caixa Econômica Federal's official channels to obtain accurate information about your case.

A worker's right

The FGTS (Unified Severance Indemnity Fund) is a right of Brazilian workers that serves as a financial reserve for specific moments in life. Knowing when and how to withdraw the retained FGTS is crucial to making the most of this benefit. 

Stay informed about withdrawal conditions, check your balance regularly, and plan your funds wisely. This way, you'll be able to make the best use of your FGTS, whether it's to fulfill a dream, invest in a personal project, or provide support in times of need.

See also: The Impact of Technological Trends on the Economy: Opportunities and Challenges for Entrepreneurs and Investors

March 16, 2024