Abstract
ABSTRACT The objective of this study is to propose a methodology that, using multiple decreases, in addition to classified by actuarial profile and source of social security costs, calculates actuarially fair and balanced rates for unscheduled collective costing benefits from Defined Contribution (DC) pension plans. There are no studies in Brazil about costing rates for benefits not scheduled in pension plans of the DC modality. Any institution that pays collective cost social security benefits must determine an actuarial rate that is not insufficient, generating a financial imbalance in the fund, nor excessive, compromising the participant’s income. This work is the first study on costing rates for collective costing benefits from pension plans with DC modalities. Actuarially fair rates are obtained considering multiple decreases and equalizing the present value of contributions and the present value of pension and disability benefits, classified by actuarial profile and source of social security cost. The specific balance rate is determined for each source of social security costs and is obtained considering the actuarially fair rates for each actuarial profile. The general balance rate is obtained by the marginal contribution of each specific balance rate. The proposed methodology was used to calculate the rates of unscheduled benefits with collective costing in DC modality plans. The proposed methodology estimated that the legal changes, resulting from Constitutional Amendment 103/2019, indirectly increased by more than 4% the general balance rate of the unscheduled benefits of the Supplementary Social Security Foundation of the Federal Public Servant of the Executive Branch of the Federal Government (FUNPRESP-Exe).
Highlights
Igor Ferreira do Nascimento & Pedro H
Closed Supplementary Pension Entities (Entidades Fechadas de Previdência Complementar – EFPC) are non-profit pension funds linked to the Complementary Pension Regime (RPC)
In the Defined Contribution (DC) modality, the amount of the scheduled benefit is calculated based on the amount accumulated in the participant’s exclusive account balance, i.e., each participant is responsible for financing his pension
Summary
Closed Supplementary Pension Entities (Entidades Fechadas de Previdência Complementar – EFPC) are non-profit pension funds linked to the Complementary Pension Regime (RPC) They manage financial resources intending to guarantee to investors/participants, who are employees of a singular (single company) or plural (multi-sponsored) sponsor, a social security income or annuity to be received after the period of work activity or in case of loss of this condition. In the DC modality, the amount of the scheduled benefit is calculated based on the amount accumulated in the participant’s exclusive account balance, i.e., each participant is responsible for financing his pension Such a pension plan can be considered a type of investment in which the capital invested by the participant is monetized to guarantee future social security benefits. The costing is done collectively in the receiving period, the risk being shared among the fund’s participants (Kolling, Petri, & Marques, 2012)
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