Brazilian Pension Funds Authority sets annual interest-rate reference corridor for closed pension funds

The Brazilian Pension Funds Authority (PREVIC) issued its annual ordinance establishing the parameter interest rate and the upper and lower bounds of the reference corridor to be observed by closed pension funds (Entidades Fechadas de Previdência Complementar, EFPC). The measure requires each entity to carry out its own convergence study to set the actuarial target rate best suited to the profile of each pension plan. Plans must compare their chosen real annual interest rate (meta atuarial), based on expected future returns, with the PREVIC reference corridor for the plan’s pension liability duration. If the rate falls within the relevant interval, its use is automatically authorised; if it falls outside, the EFPC must seek PREVIC authorisation and submit the full required documentation, including the convergence study, before PREVIC will begin its review. Where a plan’s convergence study indicates a target rate outside the corridor, the deadline to request PREVIC authorisation is 31 August 2025. The parameter rate and corridor are based on a five-year average of the daily estimated term structure of interest rates (ETTJ) published by ANBIMA, covering maturities from one to 35 years to reflect plan liability duration.