Country Panel Presentation: Brazil - Amazon S3 · Country Panel Presentation: Brazil 2016 IGP Regional Americas Seminar São Paulo, September 15, 2016 Ms. Maud Sebenne Fagundes Corporate

© International Group Program

Country Panel Presentation: Brazil

2016 IGP Regional Americas Seminar São Paulo, September 15, 2016

Ms. Maud Sebenne Fagundes Corporate Business Specialist

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This presentation was exclusively prepared for the attendees of the 2016 IGP Regional Americas Seminar. None of the contents of this presentation may be copied or disclosed to any other party or used for any other purpose than the one mentioned above without IGP's prior written permission.


Key Topics

Background Information

Country and Company Info &

Background

Social Security

Private Practice

Taxation Administration Legislation

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• MAPFRE Seguros is part of the Group BB&MAPFRE and offers a wide range of insurance

• More than 5,000 employees

• More than130,000 point of sales (brokers, bank agencies and affinities network)

• One of the 50 biggest companies in the country

• 25 millions of clients

• Biggest insurance company in its field

Company Info

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• Country Info Density: 22,43 People/km² Most populated city: São Paulo 5th largest country in the world PIB per capita: US$11,760.00 Total population: 206 million

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Country Info

• Territory Size : 8.5 Million Sq Km Capital: Brasilia Language: Portuguese

Source: doing business, ranking


Overview of the Brazilian Population

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Est. Population: 206 million – IBGE (Brazilian Statistics Institute)

Country 2000 2015

USA 1.11% 0.96%

Brazil 1.44% 0.83%

Population growth

Life expectancy Country 2000 2015

USA 76.64 79.56

Brazil 70.14 75.44

Source: World Bank

Labor force: 104 millions

© International Group Program 6

Gross Domestic Product 2015 – 2016 (Est.)

Ranking Country 2015 (US$ trillion)

Ranking Country 2016* (US$ trillion)

1 United States 17.968 1 United States 18.697

2 China 11.384 2 China 12.253

3 Japan 4.116 3 Japan 4.170

4 Germany 3.371 4 Germany 3.472

5 United Kingdom 2.864 5 United Kingdom

3.054

6 France 2.422 6 France 2.488

7 India 2.182 7 India 2.384

8 Italy 1.819 8 Italy 1.867

9 Brazil 1.799 9 Brazil 1.672 10 Canada 1.572 10 Canada 1.592

Source: World Bank * Est. FMI


Key Topics


Social Security

Summary of Social Security

Benefits

Private Practice


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Social Security Benefits

• Brazilian social security benefits are only available to Brazilians and foreigners who are contributing to the social security system Contributions paid by the employer and the employee Contributions paid by the individual (self-employed worker or business

owner)

• Social Welfare (“Previdência Social”) Insurance that guarantees payments for the contributor & their family in

the event of: illness, accident, pregnancy, imprisonment, death or old age

• The benefit is based on the level of contribution & the number of years of contributions. It includes:

‐ Retirement Benefits (Old Age Pension, Pension for length of Service, Special Pensions)

‐ Death Benefits ‐ Disability Benefits (Permanent Disability, Temporary Disability) ‐ Family Allowance

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Summary



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Pensions – Public System

Government Coverage Active population

INSS

Public Pensions

Years of contribution

Limit age / years of contribution

Workers’ compensation

Incapacity to work



• Beneficiary: all contributor to the National Institute of Social Security (INSS)

• Age retirement: Men: 65 years old + 15 years of contribution Women: 60 years old + 15 years of contribution

• Contribution service retirement: Full Retirement Income:

‐ Men 35 years of contribution ‐ Women: 30 years of contribution

• New Formula 85/95 (Social Security Factor): Men:

‐ Sum of the retiree’s age and Social Security Contribution years = 95 years or greater

Women: ‐ Sum of the retiree’s age and Social Security Contribution years = 85 years or greater

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• Employee Employee:

‐ 8% to 11% of the gross monthly salary, according to the table:

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• Employer 21% to 24% of the Employee’s monthly salary without ceiling. Self-employed persons have the option to participate in the official

social security program

Monthly Salary (Local currency, as of January 2016) Up to BRL 1,556.94 – 8%

From BRL 1,556.95 to 2,594.92 – 9% From BRL 2,594.93 to 5,189.82* - 11%

* Maximum

.



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INSS – Benefits

• Beneficiary: Any Salaried employee that suffers an accident or injury / illness at the

worksite and or commuting from work.

• Guarantees: in case of diseases / temporary disability, the first 15 days will be

paid by the employer. Worker’s Compensation benefit will start after the 16th day.

Contribution on the payroll from Jan. 2010 on

Risk Level Industry (example)

From 0.5% to 2% Low Consulting Finance

From 1% to 4% Medium Banking

From 1.5% to 6% High Manufacturing



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Public Medical Insurance

Financed by :Federal Government; States and Cities

Benefits: all Legal residents in the country

Minimum contribution: None

Where: All the territory

Percentage: 100% of the population

Guarantees: Vaccines, doctors and maternity


Key Topics


Social Security

Private Practice

Customary Private Employee Benefits:

Type & Level of Benefits / Survey

Data / Plan Design / Benchmarking /

Trends


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Customary Private Employee Benefits Life Insurance – Past 5 years evolution

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R$ 0

R$ 5,000,000

R$ 10,000,000

R$ 15,000,000

R$ 20,000,000

R$ 25,000,000

R$ 30,000,000

2010 2011 2012 2013 2014 2015

Source: SUSEP


Customary Private Employee Benefits

• 96% of large companies offer a life program

• MAPFRE is the Brazilian IGP representative since 2010

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Group life insurance



• Most usual coverage: Death Accidental Death Disability per accident Disability per Illness Spouse – 50% (death) Children - 10% (death) Funeral assistance

• Most usual capital: 18 X - 24X monthly salary There is no tax over the benefit payment

• Renewal: Annual renewal basis

• Cost sharing: Companies usually share the cost

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Life Insurance = Typical Plan Design



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Life Insurance – General Rules

General rules to review program´s structure

• Contributory = any change - approval from 3/4 of the employees

• Non Contributory = any change – no need for approval

• Beneficiaries = required by law

• Insurance certificate = required by law. It can be sent via Internet.

© International Group Program 19

Private Pensions

Private System (complementary)

CLOSED Group Funds

Sponsored by companies

Instituted by Unions / Assoc

OPEN Plans

Individual Plans

Groups sponsored by

companies




• 73% of (national or multinational) large companies offer private retirement programs

• Usual retirement age: 60 to 65 years

• Vesting period: 5 to 10 years to acquire 100% of employers

• Contribution - usually

• Contribution Period: From 20 to 30 years contribution period – usually

• Cost Sharing: May vary from 25% to 50% of program costs, depending on industry

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Private Pensions

Defined benefits programs are rare. Currently the companies have been adopting Defined Contribution Plans, only.


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• Regulation: ANS (National Health Agency) part of

the Ministry of Health.

• Companies 98% of large employers offer medical

insurance;

• Employer’s Contributions From 70 % to 90 % according to

sector’s activities.

• Categories There are usually 2 or 3 plan levels

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Private Medical Insurance

1

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• Laws Dismissed employee :

‐ option to continue in the plan up to 24 months.

Retired Employees: ‐ extended to lifetime, had the

Employee contributed to the plan for over 10 years.

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Private Medical Insurance



• Population is living longer and dealing with chronic disease

Trends

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• What companies are starting to offer as a prevention?

Wellness & wellbeing products Flexible work arrangements Home office

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Customary Private Employee Benefits Trends


Key Topics


Social Security

Private Practice

Taxation

Taxation of benefits (e.g. lump

sum versus pensions) /

Tax treatment of ER and EE

contributions

Administration Legislation

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Taxation Social Security - Contributions

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20.0% Total Payroll22.5% Total Payroll - Employers in Financial Sector15.0% Earnings - Work Cooperatives12.0% Payroll - Domestic Workers2.7% Earnings - Rural Employees

8% Earnings up to BRR 1,556.949% BRR 1,556.95 to BRR 2,594.9211% BRR 2,594.93 to BRR 5,189.82

Employee Contribution Rates

Social Security

Eligibility

Contributions

INSS covers all employees, including the self-employed

Employer Contribution Rates


Taxation

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Compulsory Benefit - Average Cost

Ruling Employer

Health From 21% to 24% of the Salary

Severance Fund The National Health System (SUS) is financed by the Federal Government – States – Cities

Severance Bonus 8% of the employees annual salary

Vacation One month salary

Vacation Bonus 33.3% of monthly salary

13th salary One month salary


Key Topics


Social Security

Private Practice

Taxation Administration

Legal requirements re. administration of

benefit plans: actuarial valuations / communications / involvement of

unions/employees

Legislation

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Administration of Plans

• Health insurance The ANS determines the standard coverage that applies to every health

insurance carrier – Law 9656/98 Most of the coverages are similar from one carrier to another Any changes in the plan has to be comunicated to the employees

• Life insurance A basic coverage is determines by Unions Any changes in the plan has to be comunicated to the employees

• Pension funds

• Insurance companies & Brokers / Consultants provide all the necessary information to the employer

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Key Topics


Social Security

Private Practice


Current legislative issues with

significant impact on the funding of the benefit plans / How are employer

and employees affected?

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Legislation

• Pensions – New Formula 85/95 (Social Security Factor) Men:

‐ Sum of the retiree’s age and Social Security ‐ Contribution years = 95 years or greater

• Women: Sum of the retiree’s age and Social Security contribution years = 85 years or greater

• The new Social Security Factor will affect both employee and employer: Employee = will have to work longer Employer = employees older higher risk (health condition) Employer = higher cost for Medical insurance , Life insurance & Pension

(time contribution)

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Update


Thank you for your attention! Key Topics We Discussed:


Country and Company Info &

Background

Social Security

Summary of Social Security

Benefits

Private Practice

Customary Private Employee Benefits:

Type & Level of Benefits / Survey

Data / Plan Design / Benchmarking /

Trends

Taxation

Taxation of benefits (e.g. lump

sum versus pensions) /

Tax treatment of ER and EE

contributions

Administration

Legal requirements re. administration of

benefit plans: actuarial valuations / communications / involvement of

unions/employees

Legislation

Current legislative issues with

significant impact on the funding of the benefit plans / How are employer

and employees affected?

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www.mapfre.com.br

Contact Info

Maud Sebenne Fagundes Business Corporate Specialist

+55 11 5111-1689 [email protected]

Grupo Segurador BB&MAPFRE

Documents

Country Panel Presentation: Brazil - Amazon S3 · Country Panel Presentation: Brazil 2016 IGP Regional Americas Seminar São Paulo, September 15, 2016 Ms. Maud Sebenne Fagundes Corporate