Our senior partner Flavio Martins Rodrigues analysed, in a report on the Investidor Institucional portal, the decision by the Federal Court of Auditors (TCU) to approve the normative instruction that gives it the power, on an exceptional basis, to directly supervise Closed Supplementary Pension Entities (EFPC) that are federally sponsored.

Flavio emphasised that the recognition in the IN that the TCU should only act on an exceptional basis should be viewed with caution. ‘Exceptionality is a vague concept,’ he said. According to him, the TCU can consider as exceptional what an EFPC considers normal.

One example, he pointed out, was the case of the audit the court carried out on Previ, the pension fund for Banco do Brasil employees, which considered the losses of the organisation’s Plan 1 in the ten-month period of last year to be ‘exceptional’. ‘For an EFPC, falls in the profitability of a plan due to losses in the variable income portfolio, within certain parameters, are normal.’

Originally, the proposal was that the inspection would be carried out on a routine basis. A revision made by the ministers determined that the power of supervision will be exercised on an exceptional basis and that the National Superintendence of Complementary Pensions (Previc) is recognised as the system’s natural supervisory body.

Check out the full article here.