After more than 30 years of disputes in courts, the Brazilian government has reached an agreement with pension funds to pay in installments R$8.8 billion in court-ordered debts — the so-called “precatórios” — starting in 2023. This debt refers to a judicial battle started in 1991, when pension organizations disputed the way bonds of the extinct National Development Fund (FND) were adjusted by inflation. The pension funds were forced to buy those securities in 1987.
Recently, the Federal Attorney General’s Office (AGU) and Abrapp, an association of pension funds, reached an agreement to put an end to this discussion, which despite being of a substantial amount, still represents a saving of almost R$5 billion for the federal government. Without the agreement, the government could have to pay R$14 billion.
In total, 88 pension funds will benefit. Among the main ones are Previ (R$3.1 billion), Petros (R$941 million), Funcef (R$379 million) and Refer (R$336 million). The pension funds expect to start receiving the “precatórios” starting next year.
David Rabelo Athayde, deputy secretary for Strategic Planning of Fiscal Policy at the National Treasury, said that the deadline to register the “precatórios” for payment in 2023 ended on April 2. “We don’t know yet if they were included [for payment to begin next year],” he said.
The list will only be known on April 30. He pointed out, however, that agreements like this contribute to the reduction of future government spending, which is positive.
With the end of the dispute, the pension funds want to fully record in their financial statements the amounts that will be received in court-ordered debts. Currently, according to representatives of the sector, there is no specific rule for this. According to the head of Abrapp, Luís Ricardo Martins, the organization is pleading with the National Superintendence of Complementary Pension Funds (Previc) to prepare a rule so that pension funds can, with legal certainty, immediately compute the total value of the debts in the earnings reports of the funds, which would help some, for example, to even eliminate deficits.
In a note, Previc said that it has not yet been notified of the agreement. According to it, without knowing the content, it is not possible to give a conclusive answer as it will depend on a technical analysis.
Previ, the pension fund of the Banco do Brasil employees, which has R$3.1 billion in court-ordered debt securities to be received from the government, said that it concluded the registration process in time to start receiving the payments in 2023.
According to the pension fund, the agreement is not about a benefit for the entities, but the mere accounting recognition of a net and certain right, claimed for more than 30 years, and that should have entered the funds’ assets at that time.
Petros, the pension fund of Petrobras employees, said in a note that the agreement was fundamental to receive the funds, generating positive impacts in the management of the plans. “Those funds are key to increase the equity of the plans, allowing management to seek investment strategies that achieve profitability above the actuarial goals of the plans.”
Gilson Costa de Santana, CEO of Funcef, the pension fund of Caixa employees, told Valor that the request of Abrapp to Previc gives more security to pension funds in the registration of the amount receivable in the financial statements. In his view, the measure can help some funds to reduce deficits.
The amount of R$379 million to be received in court-ordered debts does not solve the accumulated deficit of around R$20 billion, but it does provide a little relief.
Source: Valor International