EXPLANATORY NOTES 1.Operational Context 2. Benefit Plans 3. Presentation of the Financial Statements 4. Relevant Fact
5. Main Accounting Practices 6. Receivables - Pension Program 7. Receivables - Investment Program 8. Fixed Income 9. Variable Income 10. Real Estate Investments 11. Operations with Participants
12. Investments - PREVI Futuro Plan 13. Investments - Annuity Portfolio - CAPEC 14. Operating Liabilities 15. Contingency Liabilities 16. Actuarial Liabilities 17. Mathematical Provisions - Benefit Plan 1 18. Mathematical Provisions - PREVI Futuro 19. Technical Balance 20. Found 21. Income Statement
ACTUARIAL LIABILITIES
The Mathematical Provisions presented below were determined on the basis of actuarial calculations made by qualified professionals of the Security Division, in compliance with the opinion dated 26/2/2007.
The variation of the Mathematical Provisions, at the amount of R$ 11,098,107 thousand, contemplates the reduction of the "PREVI Installment", the increase of the "Minimum Benefit", the reduction by 40% of the personal and patronal contributions, referring to Benefit Plan 1, the reduction of the actuarial interest rate from 6% to 5,75% p.a., the amortization of 40% of the costing corresponding to the implementation of Actuarial Table GAM-83 and other actuarial variations.
a) a) Reduction of "PREVI Installment" and Increase of "Minimum Benefit"
The reduction of "PREVI Installment" and the increase do "Minimum Benefit" had an actuarial cost of R$ 4,124,734 thousand on 31/5/2006. Such cost was covered by resources of the entries Advanced Amortizing Contributions - Parity Fund (R$ 2,856,529 thousand), Parity Fund - Contributors BB (R$ 838,604 thousand) and Parity Fund - Other Contributors (R$ 146,064 thousand), of the update of these values by the actuarial index since December 2005 (R$ 174,445 thousand) and R$ 109,092 thousand of Benefit Plan 1, as mentioned in the Explanatory Notes to the Extraordinary Financial Statements of May 31, 2006, items 3, 12-b and 14-a.
b) Reduction of 40% of the Personal and Patronal
In December 2005, PREVI has an accumulated positive balance of R$ 18,870,306 thousand. Of this amount, R$ 11,539,181 thousand was registered in "Contingency Reserve", corresponding to 25% of the "Mathematical Provisions", and excess, of R$ 7,331,125 thousand, was registered in "Plan Review Reserve".
After the approval of the Executive Board, the Advisory Board determined that as of April 2006 the personal and patronal contributions rates of active and assisted participants should be reduced by 40% (forty per cent).
The reduction of the contributions, with a global cost of R$ 3,862,860 thousand in May 2006, affected the result of the period (January to May), based on the resources recorded in the entry Plan Review Reserve, in compliance with the rules established by the CGPC, as mentioned in the Explanatory Notes to the Extraordinary Financial Statements of May 31, 2006, item 15-b.
c) Reduction of the Actuarial Interest Rate
A reduction was approved in the actuarial interest rate from 6% to 5,75% p.a., which was used in the composition of the actuarial premises. This measure caused an increase of R$ 1,421,279 thousand in the Mathematical Provisions for the year.
d) Actuarial Table Change
Since 2005 PREVI has been using Mortality Table GAM-83 as a substitute for GAM-71 for actuarial evaluation in Benefit Plan 1 and PREVI Futuro Plan, which shall be implemented within five years, in the proportion of 20% per year, of which the first portion affected the Mathematical Provisions in that year. In 2006, there was the implementation of the 2nd portion (20% deferment per year in the period from 31/12/2005 to 31/12/2009).
e) Changes in the Mathematical Provisions
