The World's Largest Private Pension Event - The Brazilian Congress of Private Pension Funds November 16-19

There are 306 pension funds in Brazil covering 7.2 million people with assets totaling over USD $239 billion.

On November 16-19, 2020 the Brazilian Association of Private Pension Funds hosted their annual Congress, Congresso Brasileiro da Previdência Complementar Fechada, which is the largest private pension event in the world. The Brazilian private pension scheme is the oldest one in Latin America. The first Brazilian regulations were issued in 1977 and there are some Brazilian pension funds that are over 80 years old. Since 2001, new regulations have been introduced to update the regulatory framework to incorporate international standards, best practices, and innovations.

Due to the pandemic, this year's Congress was virtual for the first time in 40 years. Thousands of directors, asset managers, and government representatives from across Brazil attended the Congress virtually. Margaretta Colangelo presented in the Insight Session addressing the thematic axis that involves technology and longevity. To see Margaretta's presentation click here.

A Growing Aging Population

• Brazil is the world’s 9th wealthiest economy and the largest country in Latin America in both area and population
• Brazil’s population is 212 million today and projected to reach 228 million by 2042
• Life expectancy in Brazil is 70 years for men and 77 years for women, and it's estimated that men and women will live longer than 80 years by 2041
• This means that in the near future, Brazil will be dealing with the needs of a growing aging population which will put greater demands on pensions and healthcare

Pension Funds in Brazil

Although most of the Latin American private pension industry was developed after the Chilean pension reform in 1981, the first Brazilian regulations were issued in 1977. Since 2001, new laws and regulations have been issued to incorporate international standards, best practices and innovations.?Brazilian closed private pension entities are non-profit organizations that can be established on a single-employer or multi-employer basis and by labor unions and class associations. Historically, the industry was based on state owned, large multinational companies, but soon private enterprises also began to offer benefit plans to their employees.?

Since 2003, innovations have been implemented to extend the coverage to additional groups, including small and medium enterprises, labor unions, professional associations and?civil servants. As of June 2016, there were 306 pension funds covering 7.2 million people in Brazil including active participants, retirees and beneficiaries. Closed entities accounted for 12.8% of GDP, with assets under management totaling approximately USD $239 billion.

Current Status of the Private Pension System

In February 2020, the Brazilian government issued a Management Report with detailed figures on the current status of the private pension system. This report has the most updated official information. Since the report is in Portuguese, I will summarize the key points and add them to this article. The report was produced by these two supervisory agencies:

• PREVIC is the supervisory and regulatory government body of what Brazilians call “Closed Entities” or EFPC (similar to US Trustee Funds)
• SUSEP is the equivalent government body for “Open Entities”, which basically are Insurance companies offering insured plans (both individual and occupational).

Brazilian Social Security Reform promulgated in November 2019, requires that all Brazilian states and municipalities (about 2,100) that have in the past implemented their own Social Security Scheme, will have to transform their scheme into a Private Pensions System by December 2021. This is considered the next boom of the private pension system in Brazil.

The Brazilian National Association of Pension Funds

The Brazilian National Association of Pension Funds is a not-for-profit organization which represents common interests of pension funds. Its organizational structure is composed by local managements, study centers and technical commissions in local and national levels, thus providing a favorable environment to the exchange of experiences?and members’ participation.?Abrapp’s mission is to promote the development of Brazilian pension fund market and fostering technical excellence. The association maintains a productive and effective dialog with authorities, the most important entities of the Brazilian market, as well as academic institutions.?For over 40 years, Abrapp has based its institutional positioning on values and principles notably recognized by excellence, ethics, credibility, value, integrity, leadership, innovation and sustainability.

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Copyright ? 2020 Margaretta Colangelo. All Rights Reserved.

This article was written by?Margaretta Colangelo.?Margaretta is a leading AI analyst based in San Francisco. She serves on the advisory board of the AI Precision Health Institute at the University of Hawai?i?Cancer Center.?

Twitter?@realmargaretta