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Reforma Ativa PPR
2ª serie

Active Retirement Savings

Features

A responsible investment requires that you know all the implications and are willing to accept them.

The Active Retirement Savings PPR 2ª serie is an Insurance Contract linked to Investment Funds, qualified as a Structured Savings Product (ICAE).

It is a retirement savings scheme under the form of a Unit-Linked without guaranteed capital or rate, for those intending to invest in retirement with medium-/long-term objectives and with risk tolerance.

On the date the Active Retirement Savings 2ª serie are subscribed to, the Client has the possibility of choosing one of the 2 investment options available and predefined:

Life cycle

Option wherein it is the Insurer that distributes the Client's savings deliveries among each of the 4 different investment strategies in place, according to the Client's age.

For younger clients (aged < 35 years), the Insurer selects the Investment Strategies with higher risk;  as the Client’s age increases the deliveries will be gradually allocated to/invested in more conservative investment strategies, without the Client’s intervention.

Free Choice

Option wherein the Client (Policy Holder) decides on the distribution of the savings deliveries among each of the different Investment Strategies in place, according to his/her investment preferences, risk appetite and market analysis.

The Customer may choose more than one Investment Strategy, allocating partial amounts of his/her savings deliveries to different Investment Strategies. While the contract is in effect , the Client may allocate amounts (total or partial) to different Investment Strategies. This way, the Client may select the Investment Strategies that better fit his/her goals by means of a single Active Retirement Savings 2ª serie policy.

Investment Strategies

The Active Retirement Savings 2ª serie has 3 available Investment Strategies with different risk degrees, which do not guarantee the capital invested and the yield:

  • Aggressive Strategy Stock (maximum 55% of Shares)
  • Balanced Strategy (maximum 30% Shares)
  • Protection Strategy (maximum 10% Shares)

Alteration of the investment rationale while the contract is in effect

While the contract is in effect the Client may alter the available investment choices, that is, he/she may select going from a Life Cycle investment rationale to the Free Choice rationale or vice-versa.

In case he/she selects the Free Choice, the Client may, at any time, decide to alter the distribution of his/her deliveries amongst the available investment Strategies.

In case he/she selects the Cycle of Life, the change in strategy is automatically made by the Insurance Company.

Insurance Company and Insurance Mediator and seller

Conditions

In case of death of the Insured person while the contract is in force, the company Ocidental Vida will pay (within a maximum of 20 business days counting from the reception of the documents necessary for that purpose) the amount of the correspondent Account Units, estimated in accordance with the provisions of Article 11 of the General Conditions of the policy.

While the contract is in effect, extraordinary premium deliveries shall be permitted and the Insurance Company reserves the right to, at any moment, suspend the acceptance of new extraordinary premiums.

The premiums and the legal charges are due in advance.

Subscription Age

The Active Retirement Savings 2ª serie may be subscribed from the 18 years of age of the Insured Person onwards.

Term

By default: until the Insured Person is 99 years of age.
By option of the Client: Minimum duration of 5 years, ensuring that at the end of the term the Insured Person is, at least, 60 years of age.

Fees

  • Subscription fee: 0%.
  • Change of Strategy fee:no fee is paid on the amount re-allocated between the Investment Strategies available.  Each year of duration of the policy allows the making of 12 re-allocations.
  • Transfer fee: no transfer fee is paid on the amount of the accumulated savings transferred to another PPR, PPE or PPR/E.
  • Early redemption fee: 1% in the 1st year, 0.5% in the 2nd and 3rd, 0% as of the 4th year of the contract, applicable to the amount of the Account Units reimbursed, when the redemption is not made pursuant to the conditions foreseen in  Decree-Law 158/2002 (4) (1 to 4), dated 2 July. Charged to the Insured Person. The partial withdrawal and the remaining Account Units cannot be less than 250.00€.
  • Financial Management fee: the financial management fee falls on the Fund’s net global daily value and is charged monthly in the month following the one to which it corresponds. Maximum financial management fee per strategy charged to the fund:
    • Aggressive Strategy Stock - 1.75%
    • Balanced Strategy: 1.75%
    • Protection Strategy: 1.75%
  • Cost of the policy: the cost of the policy will be added to the first delivery, amounting to 5.00 €.

Alteration to the value of the Account Units

The delay in the Payment of the Premium, the partial redemptions or eventual changes to  the charges to be paid by the Policy Holder, provided that permitted by law, will automatically originate an alteration in the value of the Account Units.

Savings plan

The deliveries may have the following periodicity and minimum amounts:

  • Single Deliveries: 500.00 €
  • Regular Deliveries:
    • Monthly: 30.00 €
    • Quarterly: 90.00 €
    • Every six months: 180.00 €
    • Annual: 360.00 €
  • One-off Deliveries: 30.00 €

Beneficiaries

While living: the Insured Person.
In case of death: Without prejudice to the observation of the law, the Insured Person shall be allowed to choose its Beneficiaries in case of death.

If no Beneficiaries are expressly named and when the author of the succession is the Insured Person, the surviving spouse or other legal heirs, regardless of the couple's marital regime, may request the full return of the savings plan, without prejudice to the observation of the law. When the author of the succession is the spouse of the Insured Person and, due to the couple's property regime, the PPR savings are considered common property, the surviving spouse or the other heirs may demand the reimbursement of the part owned by the deceased.

Reimbursement

Repayment Options:

Repayment in accordance with the law: when the Client complies with the conditions legally foreseen for the redemption of a PPR policy, 3 redemption options emerge:

  • Retirement Option: The Client may choose the full reimbursement of the policy (the contract ends);
  • Programmed Payment Option: The Client may choose to convert the accumulated capital into partial, programmed/automatic reimbursements paid every month/quarter/six months, with an accumulation effect. This partial automatic redemptions mechanism shall last while there are Accounts Units allocated to the policy and, at the most, until the maturity date. These partial and automatic reimbursements will bear a constant value, to be defined by the Client , with a minimum of 250,00 €;
  • Partial Reimbursement The Client may request the partial redemption, under the terms permitted by law.

Reimbursement made outside the conditions foreseen by law, under the circumstances foreseen in the Tax Benefits Statute:

  • Full Reimbursement: The Client may choose the full reimbursement of the policy (the contract ends);
  • Partial Reimbursement The partial reimbursement of the Account Units is subject to the following conditions:
    • The minimum amount for each partial reimbursement is 250.00 €;
    • After the partial reimbursement, the value of the remaining Account Units cannot be less than 250.00 €.

Partial Reimbursement Mechanism

"Life Cycle” rationale: if the partial reimbursement occurs, the amount requested will be proportionally withdrawn from each one of the Investment Strategies.

“Free Choice” rationale: if the partial reimbursement occurs, the amount requested will, by default, be withdrawn from each one of the Investment Strategies in a proportional manner. However, the Client will have the possibility of choosing from which Investment Strategy he/she intends to withdraw the partial reimbursement.

Reimbursement conditions

The amounts insured may be reimbursed in case of:

a) retirement due to old age of the insured person;
b) long term unemployment of the insured person or of any member of his/her household;
c) permanent disability for work of the of the insured person or of any member of his/her household, regardless of the cause;
d) serious illness of the insured person or of any member of his/her household;
e) the insured person turning 60 years old;
f)  payment of credits guaranteed by mortgage on the real estate property used as the insured person's own and permanent home.

The reimbursement requested under sub-paragraphs a), e) and f) can only be made for savings delivered at least five years prior, counting from the respective delivery dates.

Yet, five years after the date of the first savings amount delivered, the Insured Person may demand the reimbursement of the amount of the policy under sub-paragraphs a), e) and f) if the amount saved during the first half of the duration of the policy corresponds to at least 35% of the total amount saved.

Except for the situations listed above, the reimbursement may be requested at any moment under the terms of the policy and subject to the consequences set forth by the applicable Tax Law.

In case of death, the following rules shall apply:

  • when the author of the succession is the Insured Person, the surviving spouse or other legal heirs, regardless of the couple's marital regime, may request the full return of the savings plan, unless a different solution occurs from the will or from a beneficiary clause in favour of a third party, without prejudice to the observation of the law;
  • when the author of the succession was the spouse of the Insured Person and, due to the couple's property regime, the PPR savings are considered common property, the surviving spouse or the other heirs may demand the reimbursement of the part owned by the deceased.

Strategies

Investment Strategies - Investment Policy

The Active Retirement Savings PPR 2ª serie has 3 available Investment Strategies with different risk degrees (without guaranteeing the capital invested and the yield):

Aggressive Strategy - Stock (maximum limit 55% of Shares)

This strategy (autonomous fund) is a match for Customers that wish to have greater investment diversity, with a view to long-term return on capital, though there are no guarantees in terms of both capital and profitability.

The portfolio will be structured in a manner that will increase the value of the capital invested in the long-term and reach a return above that of traditional investments, targeting investors with risk appetite. The Aggressive Strategy - Stock investment policy is geared towards a relevant exposure to European stock markets but may also invest in stock from other markets namely America, Asia and Emerging Markets. The remaining portfolio may include treasury bonds, corporate bonds and alternative investments.

The exposure to different asset classes may result from a direct investment in such assets or from the investment in investment funds of one or more managing companies.


Balanced Strategy (maximum limit 30% Shares)

This strategy (autonomous fund) is a match for Customers that wish to have investment diversity, with a view to medium- to long-term return on capital, though there are no guarantees in terms of both capital and profitability.

The portfolio will be structured in a manner that will increase the value of the capital invested in the medium- to long-term and reach a return above that of traditional investments, targeting investors with a moderate risk appetite.

The Balanced Strategy investment policy focused on a relevant exposure to treasury bonds and corporate bonds, with greater weight of the Euro markets. The remaining portfolio will include exposure, under 45%, to shares or alternative investments. The exposure to different asset classes may result from a direct investment in such assets or from the investment in investment funds of one or more managing companies.


Protection Strategy (maximum limit 10% Shares)

This strategy (autonomous fund) is a match for Customers that wish to have investment diversity, with a view to medium-term return on capital, though there are no guarantees in terms of both capital and profitability.

The portfolio will be structured in a manner that will increase the value of the capital invested in the medium-term and reach a return above that of traditional investments, but with a strategy focused on ensuring the integrity of the capital invested. It is meant for investors with low risk tolerance.

The Protection Strategy investment policy focused on a relevant exposure to treasury bonds and corporate bonds, with greater weight of the Euro markets. Only part of the portfolio, up to 25%, may consist of stock or alternative investments. The exposure to different asset classes may result from a direct investment in such assets or from the investment in investment funds of one or more managing companies.


Preservation Strategy

This investment option is temporarily unavailable.

This strategy (autonomous fund) is a match for Customers that wish to have investment diversity, but with a strategy focused on ensuring the integrity of the capital invested, refusing the possibility of higher return for a higher risk, though there are no guarantees in terms of both capital and profitability.

The Preservation Strategy investment policy is focused on a relevant exposure to treasury bills, securities and commercial paper issued by governments and by corporations with maturity up to 1 year, and liquidity, specifically current and term deposits.

The autonomous fund for the Preservation Strategy is not exposed to currencies other than the Euro.



Changing the Investment Strategy

If the investment option is "Free Choice": the insurance holder/insured person may at any moment decide to alter the allocation of the investment to one of the available investment strategies, 12 times a year at most, without costs. In this operation to choose to allocate an investment to other strategies - the Client will define the percentage or amount he/she wishes to allocate and choose from which Investment Strategy he/she wishes to remove it and to which he/she wishes to allocate it.

If the investment option is "Life Cycle" (Temporarily unavailable): the changes to the strategy are made automatically by the Insurance Company on the birthday of the Insured Person.

Relevant Dates

After the subscription, each savings delivery, deducted of subscription fees, shall be debited on the 2nd business day and invested in the Fund(s) corresponding to the Investment Strategy(ies) selected by purchasing account units (AU) using the quotation of the following 4th business day. The amount invested by the corresponding insurance policy can be viewed on the portfolio on the 5th business day after the subscription date.

Subscribe

To subscribe to the Active Retirement Savings - PPR 2ª serie go here for a simulation.

Tax

The tax law described is the one in effect at the time this document was made and the insurance company shall bear no burden or encumbrance if such law is altered.

20% of the amounts delivered for PPR (retirement savings plan) are eligible for income tax deductions, per taxpayer, with the following limits (depending on the age of the taxpayer, as of 1 January of the year the amount is invested):

  • 400,00 € in case of taxpayers aged under 35 (minimum investment of 2,000.00 €, per taxpayer);
  • 350,00 € in case of taxpayers aged between 35 and 50 (minimum investment of 1,750.00 € per taxpayer);
  • 300,00 € in case of taxpayers aged over 50 (minimum investment of 1,500.00 € per taxpayer).

However, the general sum deductible for income tax purposes (including tax benefits)1 cannot exceed the limits per household shown in the following table:

Taxable Income after applying the divisor of the family quotient (Euros) Limit (Euros)2
7,091 Euros or less No limit
Between 7,092 and 80,640 (inclusively) Between 2,500 (applicable to lower incomes) and 1,000 (applicable to higher incomes), with the limit being defined using the following formula:
Above 80,640 1,000

1 - The income deductions pertaining to the following are not subject to these limits: (i) children economically dependent on the household and parents that live with the taxpayer; (ii) family expenses in general; (iii) people with disability; and (iv) international double taxation.
2 - In households with three or more economically dependent children, the limits are increased by 5% per child or afilhado civil (similar to adopted child) who is not a taxpayer.

The benefit is rendered void, and the amounts deducted, increased by 10% per year or fraction of a year since the deduction was claimed, must be added to the tax collection of the year when the payment was made, if the participant was given any income or granted the reimbursement outside the conditions set forth in the law, except in case of death of the participant or when at least five years have passed since the savings were delivered.

The amounts saved by the taxpayers after they retire cannot be reported for purposes of tax benefits.

Taxation of the reimbursement

Tax on income

The taxation of the income generated by a PPR depends on the way the reimbursement is made:

  • as capital (even in case of death): taxable income, composed of the difference between the amount reimbursed and the correspondent deliveries, shall be taxed autonomously by withholding at source a rate of 20%, only applicable to two fifths of its value, which corresponds to an effective rate of 8%.

When the reimbursement is made due to a situation not foreseen in article 4 (1 to 4) of Decree-Law 158/2002, of 2 July, the taxable income is composed of the difference between the amount reimbursed and the correspondent deliveries, being taxed by withholding at source a rate of 21.5%. If the amounts deposited during the 1st half of the duration of the contract represent at least 35% of the total amount invested:

  • and the redemption is made after 8 years of duration of the policy, only two fifths of the income shall be taxed, corresponding to an effective rate of 8.6%;
  • and the reimbursement is made between the 5th and 8th year of the duration of the policy, only four fifths of the income shall be taxed, corresponding to a withholding tax rate of 17.2%.
  • as a regular payment: if the contract establishes the payment of regular and periodical amounts, the tax regime applied will be the one corresponding to Category H of the Income Tax (pensions), including the rules on withholding tax.

If the contract establishes the payment of amounts due to situations not comprised within the ones foreseen in article 4 (1 to 4) of Decree-Law nr. 158/2002 of 2 July, the reimbursement is taxed in accordance with the rules described in the previous paragraph relating to a similar situation.

Tax in case of transfer on death

Stamp tax will not be due in case the amounts invested in retirement savings funds are reimbursed on account of death.

This information does not dispense with the reading of the legally required pre-contractual and contractual information

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