Brazilian Pension Funds Authority approves draft overhaul of deficit and surplus rules introducing solvency index bands and a three-year grace period

The Brazilian Pension Funds Authority (PREVIC) approved a draft proposal to change how results are calculated for deficit funding and surplus allocation in closed pension funds, moving to a solvency-index based framework with tolerance periods before remedial measures are triggered. The draft was sent to the National Council for Complementary Pensions (CNPC) for discussion and potential rulemaking to amend CNPC Resolution 30/2018. The proposed model makes the “solvency index” the primary indicator for deciding whether a plan must equate a deficit or may distribute a surplus. It would set tolerance bands of 25% above and below the solvency target, with the target set at 100% after a transition period of up to eight years, and would allow up to three years for plans to return to the target range without requiring new deficit-equating plans, aiming to avoid extraordinary contributions driven by temporary (non-structural) deficits. It also recommends a “supportable” limit for total normal and extraordinary contributions of deductions up to 35% of salary or pension benefit. CNPC will deliberate on the proposal and decide whether to submit it to public consultation.