What is a Mutual Privatization Fund (FMP) and how does it work?
Discover how the Mutual Privatization Fund (FMP) works and how this type of investment works
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The Mutual Privatization Fund (FMP) is an investment fund that emerged in the 2000s.
This type of investment allows Brazilian workers to use their money Severance Pay Guarantee Fund (FGTS) for stock market applications.
But what does this mean in practice? How does the FMP work?
That’s what we’re going to explain now! Keep reading for more information.
What is a Mutual Privatization Fund (FMP)?
The Mutual Privatization Fund (FMP) is an investment category in which it is possible to use FGTS resources to invest in shares of state-owned companies that are in the process of privatization.
In other words, this fund uses the money invested to enable Brazilians to become partners in these companies.
This type of investment was used for the first time in 2000, when Petrobras carried out a capitalization operation.
Furthermore, it was used again in 2002, in one of the stages of the Vale company privatization program.
In other words, the investor ends up having one more possibility to invest resources that he can currently only access under special conditions.
However, it is important to remember that investment in the FMP is limited to 50% of the worker's FGTS balance.
The Privatization Mutual Fund is invested in shares of listed companies.
How does the Mutual Privatization Fund (FMP) work?
The FMP is basically a fund like any other.
In other words, the investor's resources will be applied based on a strategy defined by the manager.
The profitability is divided between the fund's shares. The manager, who is the professional responsible for the portfolio, receives a percentage for the work of managing the fund.
After the investor uses part of the FGTS money (50% limit), he will choose a brokerage firm, which will allocate such resources to the manager.
In the case of the FMP, the portfolio must be formed only by companies that are in the process of privatization.
Currently, financial institutions authorized by Securities and Exchange Commission (CVM) can manage this fund, such as stockbrokers and banks.
What is the Severance Pay Guarantee Fund (FGTS)?
To better understand what a Mutual Privatization Fund (FMP) is, it is essential that you know exactly what FGTS is.
The FGTS is a fund created by the federal government with the aim of protecting workers who are unfairly dismissed.
At the beginning of each month, the employer (company) deposits a percentage of the gross salary month by month, which corresponds to 8% of the salary.
The fund is made up of the total value of all these monthly deposits. The resources belong to the workers, who, in certain cases, can withdraw the resources.
Now that you know what FGTS is, it is also important to understand when it is possible to withdraw this money.
Withdrawal is allowed in the following situations:
· Dismissal without just cause;
· Retirement;
· Buying your own home;
· Closure of the employing company;
· Termination of a temporary worker's employment contract;
· Termination of contract by mutual agreement between employer and employee (in this case, it is only possible to withdraw 80% from the balance of the linked account);
· Lack of paid activity for casual workers for 90 days or more;
· Be 70 years of age or older;
· Serious illnesses (such as AIDS or cancer) of the worker, spouse or child, or in the case of the terminal stage of any illness.
Source: Nubank
How to consult the Service Time Guarantee Fund (FGTS)
Checking your FGTS is very simple.
To begin, you must access the FGTS website. Then, enter your PIS number that you consulted using your CPF.
Click on “Register password”. Read the rules carefully and click on “I accept”.
Fill in the fields with your personal data. Create an 8-digit password and confirm it (this password should never be shared with third parties).
When your registration is complete, you will receive a notification.
Who can access the Mutual Privatization Fund (FMP)?
Citizens who have resources invested in the FGTS can request withdrawal to access the FMP.
The contribution and the rescue from the Privatization Monetary Fund are carried out directly from individual FGTS accounts.
FGTS in the purchase of Eletrobras shares
The FGTS, as you already know, is deposited into the worker's FGTS-linked account.
This amount is not deducted from the salary and the employer must make the deposit.
Therefore, resources can only be withdrawn in cases of dismissal without just cause, purchase of one's own property and other special situations.
In this case, we are talking about a special situation. The federal government released the purchase of Eletrobras shares with the use of FGTS (Service Time Guarantee Fund), after the company's privatization.
In other words, workers with FGTS funds were able to use part of the balance to acquire company shares.
The use of these resources to make the investment was limited to 50%. The minimum amount for investment was R$ 200.
The deadline for reserving a balance to invest in shares with the FGTS ended on June 8th.
How are Mutual Privatization Funds (FMP) taxed?
Taxation of capital gains from investment in a Mutual Privatization Fund (FMP) occurs as follows:
If the fund yields up to the FGTS account yield limit (3% + TR), there will be an exemption from Income Tax.
However, if this profitability is exceeded, the IRS will have to pay the 15% tax rate for income tax. The fund administrator will make the payment.
Conclusion
Now you know what a Mutual Privatization Fund (FMP) is and how this type of investment works.
To start investing, it is very important that you know your investor profile, set financial goals and choose a safe, reliable broker with a good reputation in the market, regulated by the CVM.
