PPRs (Planos Poupança Reforma) have a genuine tax advantage. But most of the products banks push have fees that quietly eat your returns. Here's how to tell the good ones from the rest.
The tax benefit is real
If you contribute to a PPR, you can deduct 20% of your contribution directly from your IRS bill — not just from your taxable income, but from the tax itself. The annual limit depends on your age: under 35, you can deduct up to €400 (on contributions up to €2,000); ages 35–50, up to €350; over 50, up to €300. For someone paying IRS at all, this is a guaranteed immediate return on the money contributed.
The fee problem
The tax benefit gets eaten by fees if you're not careful. A PPR with an annual management fee of 2% needs to return more than 2% per year before you see any real gain. Many bank-sold PPRs carry fees between 1.5% and 2.5%, plus entry charges. Over 20 years, a 2% annual management fee can wipe out more than a third of your potential gains. The bank earns regardless of whether your money grows.
What to look for instead
Index-linked PPRs with low fees exist and are not hard to find. Look for products with a TER (Total Expense Ratio) under 0.5% per year. The key questions before subscribing: What is the annual management fee? Is there an entry or exit fee? What does it actually invest in? Avoid products that are mostly bonds if you're under 50 — your time horizon allows for more growth and you're leaving returns on the table by playing it too safe too early.
Our Investing Sensibly program covers PPRs, ETFs, long-term platforms, and how to build a portfolio that matches your actual situation.
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