The Practice of Risk-Based Supervision in Brazilian Pension Funds

Abstract: The present paper analyzes the evolution of supervision in the Pension Funds in Brazil, focusing on the transition to the Risk-Based Supervision (RBS) model. It addresses the context of the 1998 pension reform and the introduction of the Principle of Economic-Financial and Actuarial Balance. The central objective is to present the RBS as a viable model to promote the financial-actuarial balance of pension plans managed by pension funds and protect the interests of participants and beneficiaries. The study utilizes a qualitative approach, with a bibliographic and documentary review, analyzing legislation, regulatory norms, and technical documents and considering international best practices. The research demonstrates that the RBS, advocated by the International Organization of Pension Supervisors (IOPS), has existed in the Brazilian legal framework for two decades. PREVIC Resolution 23/2023 represents a milestone in consolidating the RBS, introducing principles such as proportionality, and emphasizing preventive guidance. The practical implementation of the RBS, focusing on risk analysis and preventive action, is essential to ensure the sustainability of the Pension Fund system in Brazil, especially in the context of the system's expansion, especially after the 2019 reform, which requires supplementary pension plans to be offered to civil servants at all levels of government. The model requires constant improvement and adaptation to market dynamics, demanding investments in technology and training. PREVIC's work is a crucial factor for the success of the RBS, ensuring technical expertise and the ability to engage in dialog with the Pension Funds.