Brazilian Pension Funds Authority explains CNPC rules allowing shared administrative funds and capped innovation investments by closed pension entities

The Brazilian Pension Funds Authority (PREVIC) set out how National Council of Complementary Pension (CNPC) Resolution 62/2024, effective 24 March, changes the rules for the Administrative Management Plan (PGA), administrative funds and budgeting in Brazil’s closed supplementary pension system. Within “prudential and conservative” parameters, closed pension entities (EFPC) will be able to create a shared administrative fund to finance promotion and innovation initiatives intended to attract new sponsors, instituting entities and participants. To undertake these investments, the entity’s executive board must prepare an administrative management feasibility study and submit it for approval by the deliberative council, together with an opinion from the fiscal council. The study must cover items including the funding needs of benefit plans’ administrative expenses, projected contribution and future benefit flows, the need for and capacity to support promotion and innovation, a cost-benefit analysis of the intended operations, and the economic-financial feasibility of accessing the earmarked resources, alongside a budget for the next three fiscal years. The framework also sets investment limits linked to entity size and complexity, ranging from 5% to 25% of the stock of values in plans’ administrative funds constituted up to 30 December 2024, with a further maximum amount cap in each category. EFPCs have up to one year from the resolution’s entry into force to update the regulations of the PGA and the shared administrative fund, with PREVIC indicating it will follow implementation through its supervisory and enforcement activities.