At a public hearing of the Chamber of Deputies’ Social Security, Social Assistance, Childhood, Adolescence and Family Committee, the Brazilian Pension Funds Authority (PREVIC) director-superintendent Ricardo Pena addressed the reported January to November 2024 deficit in Previ-BB’s Plan 1, arguing that a deficit in complementary pensions does not necessarily equate to a realised loss given the long-term nature of investment portfolios. He also pointed to a high solvency level in Brazil’s closed pension fund system, close to 100%. Pena described PREVIC’s supervisory approach for the sector, which he said covers 8.3 million Brazilians, and noted that Previ-BB, as the largest closed pension entity (EFPC) in Brazil, is classified in the S1 segment of the supervisory model. He said PREVIC maintains continuous on-site oversight, with Federal Revenue auditors monitoring governance, investments, funding and liabilities, and holding regular meetings with governance bodies that feed into an annual report with recommendations and determinations. On Plan 1, he cited a 20-year track record of 15 surplus years, a BRL 14.5 billion positive result in 2023 and a BRL 3 billion negative result in 2024, with 2025 described as recovering, showing a BRL 1.4 billion deficit in the first half; despite the deficit, the plan was described as 98% solvent. The 2024 deficit was attributed to economic fluctuations, with equities down 10% and government bonds down 8%, and PREVIC’s supervisory work was cited as finding disciplined adherence to the investment policy, including tactical rebalancing and no atypicalities. He also outlined a supervisory escalation framework ranging from guidance and orientation, to recommendations and enforcement through adjustment terms and potential penalties, and ultimately intervention or liquidation where an EFPC can no longer pay benefits. Looking ahead, Pena pointed to PREVIC’s agenda of expanding closed pension coverage through changes to investment options and possible automatic enrolment approaches, embedding environmental, social, governance and integrity criteria in EFPC investment policies, and refining supervision via segmentation by size and complexity to support proportional regulation.
Brazilian Pension Funds Authority (PREVIC) 2025-08-20
Brazilian Pension Funds Authority says Previ-BB Plan 1 deficit reflects market fluctuations and the fund remains 98% solvent
At a public hearing, PREVIC director-superintendent Ricardo Pena addressed the 2024 deficit in Previ-BB’s Plan 1, emphasizing the long-term nature of pension investments and Brazil's closed pension fund system's high solvency. He detailed PREVIC's supervisory approach, highlighting continuous oversight and a supervisory escalation framework, attributing the deficit to economic fluctuations. Pena also outlined plans to expand pension coverage, integrate ESG criteria, and refine supervision through segmentation.