PPR pension plan fees eat up most of the tax advantage. With costs of 2% a year there is no gain at all
A PPR retirement savings plan (Plano Poupança Reforma) has two tax advantages. The first is an IRS income tax deduction of 20% of the year's contributions. The second is that if the money is withdrawn under the plan's rules, the income is taxed at 8% instead of the usual 28%. But with many plans, the management companies' fees eat up almost all of this advantage. That is the finding of Compara PPR, an independent comparison website, based on data from the fund association APFIPP as of 30 September 2026 (Compara PPR study, Jornal Económico).
The calculation works like this: from age 30 to 60, a person puts €2,000 a year into a PPR and also pays every IRS refund into it. For comparison, the study takes an exchange-traded fund (ETF) tracking global shares, bought through a broker. Both investments return 7% a year before costs. If the PPR's costs are 0.2% a year, the same as the fund's, by age 60 the PPR comes out €55,752 ahead. With PPR costs of 1.59% a year the advantage shrinks to €10,894, and at 2% the fund is already €104 ahead. If the IRS refunds are spent rather than invested, the PPR's advantage disappears at costs of around 1.1% a year.
Of the 47 plans whose costs are known, 41 charge 1.1% a year or more, 12 charge 2% or more, and half charge more than 1.59%. At costs like these, according to Compara PPR, about 80% of the tax gain goes to the management company.
The IRS deduction is 20% of the year's contributions, but no more than €400 for under-35s, €350 for those aged 35 to 50 and €300 for over-50s; age is taken as at 1 January. To get the full deduction, you need to contribute €2,000, €1,750 and €1,500 a year respectively. That is why, at the end of the year, banks and insurers push hard for people to top up their PPRs. What a plan charges each year — the management fee (comissão de gestão) and ongoing charges (custos correntes) — is stated in its key information document. Plans can be compared on the Compara PPR website.
Only contributions made by 31 December will count towards the IRS deduction for 2026.
