Retirees who keep working in Brazil: FGTS, the 40% penalty, INSS and what changes in the contract

Voluntary retirement does not end the employment contract: retirees can stay in the same job with all their rights (STF, ADI 1,721 — the STF is the Federal Supreme Court). They can withdraw FGTS when they retire and, if later dismissed without cause, receive the 40% penalty on all deposits made during the contract. They keep contributing to the INSS (social security), but those contributions generally do not increase the retirement already granted.

Quick summary

• The contract continues: voluntary retirement does not end the employment relationship.
• FGTS (the Severance Indemnity Fund): withdrawal allowed on retirement (Law 8,036/1990, art. 20, III).
• 40% penalty: on the whole period of the contract, on dismissal without cause (TST SDI-1 Guideline 361 — the TST is the Superior Labor Court).
• INSS: contributions remain mandatory.
• Special retirement: recipients cannot continue in special (hazardous) activity (STF, Theme 709).
• Disability retirement: the contract is suspended.

Points to watch

1. Age discrimination: dismissing someone just for being retired or older may be discriminatory — see Discriminatory dismissal.
2. Health insurance: those who contributed to the group plan may have the right to keep it after leaving, under Law 9,656/1998, arts. 30 and 31.
3. Family allowance is paid to some retirees — see Family allowance 2026.
4. "Un-retirement" and re-retirement: the STF did not allow swapping retirement based on new contributions.

Step by step on retiring

1. Inform the employer that the benefit was granted.
2. Withdraw FGTS through the FGTS app, if you wish.
3. Keep tracking monthly deposits — they will be the basis for any future penalty.
4. If it is special retirement, talk to HR about moving to non-hazardous work.

Frequently asked questions

Are retirees entitled to unemployment insurance?

No. Unemployment insurance is not paid to those receiving a retirement pension.

Can the employer dismiss me because I retired?

Retirement is not grounds for dismissal for cause. Dismissal without cause is possible, with all amounts paid, but it cannot be discriminatory.

Read more in this series

• FGTS: how to check it and the 40% penalty
• Discriminatory dismissal
• Severance pay
• Accident allowance
• Index: complete guide to labor rights