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2.1.1

PREVI has its own reference file for Benefit Plan 1 participants, which is integrated to the Entity’s other information systems. To compose this reference file, we receive financial and non-financial information (personal and functional data) from Banco do Brasil and from the available database. The data is treated carefully, and submitted to consistency and reliability filters.

2.1.2

The reference file database that is used for the actuarial appraisal of Benefit Plan 1 dates to December 2009. The reference file’s summary shows the following figures for active participants, assisted participants and pensioners:

 

Table B * Not considering 73 participants who received only minimum pension.
**Participants contemplated in contribution time, age, anticipated, and disability.

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2.2.1

 

On account of CGPC Resolution n. 16, of 11/22/2005, and of SPC Normative Instruction n. 9, of 01/17/2006, Benefit Plan 1 is established as a defined benefit plan. It is composed of a general part, aimed to all participants, based on the defined benefit mode, and of an optional part, which is additional to the general part, based on the variable contribution mode, and has exclusive contributions made by the participant.

 

2.2.2

 

There are also special benefits, paid while the resources that are in the funds constituted to cover the respective benefits suffice to support them, as defined in Chapter XV of the Regulation.

 

2.2.3

 

Table C shows the types of benefits provided by Benefit Plan 1:

 

Table C (*) relative to participants who contributed while active for more than 30 years until 12/31/2006,
to be paid in up to 24 months.

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2.3.1

Benefit Plan 1 is appraised based on the capitalization system for all regular benefits. The financial system that is used is capitalization and the actuarial method applied is the aggregate one, as provided for by item 5.1 of the Exhibit of CGPC Resolution n. 18, of 03/28/2008.

2.3.2

The premises used in the December 2009 actuarial reappraisal for the 2010 fiscal year were approved by the Executive Board and by the Deliberative Body. Table D presents the values concerning the premises of December 2008 to December 2009:

 

 

2.3.3

When comparing the current premises to those of the previous year, we notice there were changes in the mortality table, actual interest rate, wage and benefit capacity, and actual wage growth rate.

2.3.4

The mortality table was modified due to an actuarial study by PREVI, which showed that the average life expectancy of PREVI participants has increased in the last years. When analyzing mortality rates, life expectancy, and results from statistical tests, we verified that the PREVI population leans towards the use of the AT-2000 mortality table.

2.3.5

Considering that the prospective method is used for calculating the mathematical reserve, which calculates actual values, commitments, and future plan contributions, it seems more appropriate to use table AT-2000.

 

2.3.6

 

The actual interest rate decreased from 5.75% to 5.5% based on the macroeconomic scenario that subsidized the 2010-2016 Investment Policy.

2.3.7

The capacity factor increased from 97.972% to 98.139% due to a change in scenario regarding the long-term inflation rate.

2.3.8

The wage growth rate, which reflects the projection of the active participants’ wages when they start receiving the benefit, was changed from 0.5881% to 1.2619%, as per a report prepared by the sponsor.

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2.4.1

Benefit Plan 1 has Reserves to Amortize on account of the financial cash flow coverage relative to participants hired by Banco do Brasil until 04/14/1967, and including, called Group-67. This is covered by the Agreement signed between Banco do Brasil and PREVI on 12/24/1997. On 12/31/2009, the amount of the Reserve to Amortize was R$ 12,554,779,729.40.

2.4.2

The Funding Plan to finance the Reserve to Amortize was determined by the mentioned Agreement, and PREVI is in charge of measuring the social security commitment, which appears in the Accounting and Actuarial Balance as 53.6883529% of the total retirement charge for Group-67

2.4.3

The Fourth Clause of the Agreement determines that Banco do Brasil must pay beforehand contributions that are calculated as anticipated amortizing contributions. On 12/31/2009, the book value “Anticipated Amortizing Contributions” corresponds to the same amount as the Reserve to Amortize, i.e., R$ 12,554,779,729.40.

2.4.4

According to the Tenth Clause of the Agreement, the Agreement’s term is tied to the liquidation of the last commitment for participants of Group-67’s retirement supplements.

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2.5.1

Table E shows the results of the actuarial appraisal carried out regarding the commitments taken on by the plan and its Net Assets on 12/31/2009:

 

Table E – Value in Brazilian Real (R$)

 

2.5.2

As a result of the performance of the investment assets and the normal evolution of the social security liability, an accumulated technical surplus of R$ 44,202,895,964.55 was calculated, constituting a Contingency Reserve equivalent to R$ 18,247,263,701.08 and a Special Reserve for Plan Revision of R$ 25,955,632,263.47.

2.5.3

 

The following is the evolution of the Mathematical Reserves and of the Net Assets of Benefit Plan 1 in the past three years (amounts in R$ million)

 

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2.6.1

The Compensation Fund was created in December 2007 with resources from the Special Reserve and it is calculated actuarially for the payment of the Special Compensation Benefit and its reversal rule is stated in Article 86 of the plan’s regulations.

2.6.2

The Proportionality Fund was constituted in December 2007 with resources from the Special Reserve and it is calculated actuarially for the payment of the Special Proportionality Benefit and its reversal rule is stated in Article 87 of the plan’s regulations.

2.6.3

On 12.31.2009 the Compensation and Proportionality Funds were actuarially recalculated using the premises approved for 2010. The values are shown in the following table:

 

Table F – Value in Brazilian Real (R$)

 

2.6.4

In order to meet the demands of Paragraph 3, Article 86, the exceeding value of R$ 94,146,533.64 was reverted from the Proportionality Fund to the Compensation Fund.

2.6.5

Although there are available resources in the Special Reserve, the Compensation Fund was computed as R$ 4,939,920,597.73, observing what is stated in the Resolution CGPC 26/2008 concerning surplus use.

2.6.6

The Certain Income Fund was computed based on financial calculations and is constituted by resources originating from the Special Reserve for the payment of the Special Certain Income Benefit. The value of the fund on 12/31/2009 was R$ 19,037,832.06.

2.6.7

There is also the Contribution Fund, created in July 2007 with resources from the Special Reserve, financial in nature, formed because of the budget forecast, created to pay personal and employer contributions throughout the year. The value of the fund on 12/31/2009 was R$ 6,563,199.16.

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2.7.1

The Funding Plan determines the contribution level that is required to fund the plan’s benefits according to the financial system and the funding method in order to maintain the plan’s balance and solvency.

2.7.2

Benefit Plan 1 is financed by the monthly and annual contributions made by the active participants, retirees, and by the sponsor. The active participants’ contributions are calculated based on their participation wage, as per Table G:

 

 

2.7.3

The average active participant contribution percentage is 6.71% of the participation wage. In the case of retired participants, the contribution percentage is 4.8% of the retirement supplement. The normal sponsor contributions correspond to the amount of active participant contribution or receiving benefits foreseen in the Regulation.

2.7.4

The Regulation in effect, as approved by the Office of Supplemental Pension Plans (SPC) on 12/19/2007, determines that:

“Art. 84 – Charging normal contributions from participants and sponsors, for the General Part of the Plan is suspended.

 

Paragraph 1 – This measure will be adopted for one year, and the suspension can be renewed by the Deliberative Body provided there is a Special Reserve from the previous year.”

 

2.7.5

To fulfill the provisions set forth by the Regulation, the Contribution Fund was constituted in 2007 with an amount equivalent to the contributions of the 2007 fiscal year – R$675,000,000 – based on the amount estimated for the year.

2.7.6

The amount estimated for 2010, regarding personal and employer contributions of Benefit Plan 1, is R$ 780,283,304.00. As per observed in item 2.5.2, there are sufficient funds in the Special Reserve calculated for 12/31/2009 for maintaining the suspension on charging normal contributions from participants and sponsors.

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2.8.1

These are the differences between the projected actuarial premises for the year and the actual experience in the period. Based on the comparison of the attained and expected amounts for Benefit Plan 1, we noticed the following factors varied the most:

Change in the Actuarial Premises: as mentioned in items 2.3.3 to 2.3.7, the premises relative to the mortality table, actual interest rate, wage growth rate, and the capacity factor changed between 2008 and 2009. The difference between the premises generated an increase in the Mathematical Reserve in the amount of R$ 3.235 billion.

Participants in Imminent Risk: there are some 11,840 participants who, even after fulfilling the requirements to get the scheduled benefit (especially the anticipated benefit), remain in the Plan as active participants. This fact generated an actuarial gain for the plan of R$ 408 million.

Calculated Profitability x Actuarial Goal: the actuarial goal for 2009, equivalent to the sum of the INPC from January to December and the interest rate, corresponded to 10.10%, while the performance of the plan’s investment asset was 28.25%.

 

2.8.2

 

Table H presents the variation of Net Assets and the Mathematical Reserve throughout 2009:

 

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2.9.1 CGPC Resolution n. 26

2.9.1.1

On 09/29/2008, the Supplemental Pension Plan Management Council (CGPC) approved CGPC Resolution n. 26, which provides on the conditions and procedures to be observed by the entities while calculating results, allotting amounts and using the surplus. The hypotheses that should be considered in the appraisal’s calculation in the event of Benefit Plan revisions are:

- Adoption of the AT-2000 Mortality of Able Table;
- Adoption of the Actual Interest Rate of 5% per year.

 

2.9.1.2

Considering the above-mentioned hypotheses, for illustration purposes, we present the result calculation amounts in Table I:

 

Table I – Figures in Brazilian Real (R$).

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2.10.1

The amounts calculated for the Mathematical Reserves and the Social Security Funds, and the evolution that is expected for the commitments taken-on by the Plan regarding its participants showed that the actuarial premises were defined appropriately for the period under analysis. Therefore, we recommend that the Funding Plan in effect for Benefit Plan 1 be maintained.

2.10.2

Considering what was presented in item 2.7.6, we believe the personnel and employer contribution collection suspension should be maintained for 2010, reconstituting the Contribution Fund based on the annual budget for participant and sponsor contributions, without any impact on the Funding Plan.

2.10.3

 

Considering the above, we conclude that the technical result attained by the Plan at the closing of the 2009 fiscal year was mainly influenced by the profitability obtained from PREVI in investment assets. It is way above the actuarial goal and thus increased the plan surplus.