A new plan to align Brazilian pension fund administrators’ (EFPCs) accounting rules to international standards was approved on January 26, 2009. The new regulation, which comes into effect in January 2010, aims to boost transparency, a key concern given the recent growth in Brazil’s pension sector.
The new regulation establishes procedures for EFPCs as follows:
- Balance sheets must be kept separate for funds’ two different business lines: pension administration and health insurance.
- Plans must share information accurately and simply with both fund members and third parties, particularly explaining benefits plans offered by the fund and their historic financial results.
- The amount EFPCs charge to create new benefits plans can now be amortized in the 60 months following the approval of the Managing Council of Complementary Social Security.
By December 31, 2009, EFPCs must bring their internal operations into line with the new rules. As these new rules comprise a 17 percent reduction in the number of categories used, they are expected to substantially simplify funds’ accounting procedures.