Inflation Profits from DETONA FGTS: Birthday withdrawals, would it be the best choice?

Workers in accounts linked to the Severance Indemnity Fund (FGTS) receive part of the R$13,2 billion in profits that the fund will have in 2021. This amount is equivalent to 99% of last year's total revenue, or 13,3 billions of reais.

Caixa Econômica Federal completed payments to 26 million citizens this Tuesday (106,7). In total, 207,8 million active and inactive FGTS accounts benefited. This is because a worker can have multiple linked accounts from previous jobs.

Despite the good news, the data shows that the FGTS will give returns that lose to inflation in 2021, a fact that has not happened since 2016. In effect, the statement means that the money that workers leave in fund accounts is losing purchasing power , affected by rising prices.

FGTS profitability

Currently, the FGTS offers a fixed return of 3% per year, plus the variation in the Reference Rate (TR) – zero last year.

With the inclusion of the FGTS 2021 profit distribution, the remuneration should rise to 5,83%. However, when it comes to inflation, the damage is palpable: the Broad National Consumer Price Index (IPCA) closed last year at 10,06%.

For example, in relation to 2020, the FGTS provided a profitability of 4,92%, compared to 4,52% for the IPCA at the time. The same happened in 2018, when the return of the FGTS guaranteed a return of 6,18% to workers, compared to the rate of 3,75% recorded by official inflation for the period.

The table below shows the disputes between FGTS and IPCA declarations:

Year
Return of FGTS
HICP

2021
5,83%
10,06%

2020
4,92%
4,52%

2019
4,90%
4,31%

2018
6,18%
3,75%

2017
5,59%
2,95%

2016
7,14%
6,29%

Source of the above data: Caixa Econômica Federal and IBGE

With inflation destroying FGTS results, is it worth adding the birthday withdrawal?

As mentioned above, people who put money into FGTS are earning less and less. This fact makes workers question whether it is worth insisting on birthday withdrawals, which authorize redemptions from the fund every year, always in the month of birth.

Unlinking the FGTS could be an interesting option for those looking to generate gains above inflation with the fund's resources, say market experts.

However, the advice applies to those who already have emergency reserves and have a strategy for how to use the funds. The idea is to prevent unprovoked withdrawals from the fund, which was created to help workers in times of emergency.

“As the FGTS was originally designed to assist workers in unexpected situations, such as layoffs, it is necessary to consider this premise if taxpayers do not have financial planning and provisions for contingencies”, explains Fernanda Melo, Financial Planner at CFP.

On the other hand, said the expert, if the person has some more liquid resources at an unforeseen moment, the decision to apply FGTS resources in other sources of investment could be a good choice. This would further avoid the loss of inflation that reached 11,89% in the last 12 months.

It is always recommended to look for investment options that protect investors from inflation, but that have low credit risk (financial loss).