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Financial Statements 3Q08


Note 27 – Retirement and Pension and Health Plans

a) Caixa de Previdência dos Funcionários do Banco do Brasil – Previ

Banco do Brasil is the sponsor of Caixa de Previdência dos Funcionários do Banco do Brasil (PREVI) which provides participants and their dependents with benefits which are complementary or similar to those of the Basic Government Retirement Plan. The plans offered through PREVI include both defined contribution (Plano Previ Futuro) and defined benefit (Plan n.° 1) plans, the latter having adopt ed the capitalization method for actuarial calculations. On September 30, 2008 Previ had 146,447 participants, with 35,166 active participants of Benefit Plan n.º1, 47,299 active participants of Plano Previ Futuro and 63,982 retirees (on September 30,2007 there were 138,266 participants, of which: 36,831 were active participants of Benefit Plan n.º1, 37,996 were active participants of Plano Previ Futuro and 63,439 were retired employees).

a.1) The funding of the vested and unvested benefits is summarized as follows:

Participants employed before April 14, 1967, who were not retired and who were not in a position on that date to request their retirement, contemplated in the contract signed on December 24, 1997 between the Bank and PREVI (Plan n.° 1): the sponsor assumes the commitment for the payment of pensions for this group; mathematical reserves ensuring benefits corresponding to such group are fully paid-up at Previ. The retirement benefit of this group is characterized as a defined contribution.

Participants employed between April 15, 1967 and December 23, 1997 (Plan n.° 1): Due to the accumulate d surplus, in June 2007, the contributions of participants, beneficiaries (retirees and pensioners) and of the sponsor (Banco do Brasil) were suspended, retroactive to January 2007. This measure will be evaluated every twelve months, with its maintenance depending on the existence of the Special Reserve of Benefit Plan n.° 1, resulting from t he superavit in the Plan.

Participants employed from December 24, 1997 (Plano Previ Futuro): active participants contribute to PREVI an amount between 7% and 17% of their contribution salary, which varies based on length of service and the amount of the contribution salary. There is no contribution for retired participants. The sponsor contributes an amount equal to the contributions of the participants, limited to 14% of the total contribution payroll of these participants. The retirement benefit of this group is characterized as a defined contribution.

a.2) Effects of Benefit Plan n.° 1, based on actuarial v aluations as of December 31, 2006 and 2007 carried out by an independent actuary, and of the Plano Previ Futuro as required by CVM Resolution 371 of December 13, 2000:





A new mortality table, AT-83 plena, was deployed in July 2007 without causing any effects on the Bank's net income, as a result of the superavit inPREVI.

a.4) The Supplementary Pension Steering Committee issued Resolution 26, of September 29, 2008, which addresses the conditions and the procedures to be observed by closed supplementary pension entities in the determination of net income, in the allocation and use of surplus and in the structuring of deficit of pension benefit plans that they manage, and lays down other provisions. Banco do Brasil is analyzing the impacts of this resolution on its assets.

b) Benefits of sole responsibility of the Bank

Banco do Brasil is responsible for: (a) retirement pensions to founder participants and pension payments to survivors of participants deceased up to April 14, 1967; (b) payment of retirement supplements to the other participants employed by Banco do Brasil who retired up to April 14, 1967 or who, on that date, would have the right through length of service to retire and who had at least 20 years of effective service with the Bank; and (c) increase in the amount of retirement benefits and of pensions in addition to that provided for in the Benefit Plan of Previ, resulting from judicial decisions and from administrative decisions on account of restructuring of the job and salary plan and of incentives created by the Bank. This plan is of the defined benefit type, and adopts the capitalization regime in actuarial valuations, and had 7,959 retirees and pensioners participating on September 30, 2008 (8,232 retirees and pensioners participating on September 30, 2007).

b.1) The cost of these benefits is totally funded by Banco do Brasil.

b.2) Effects on the financial statements of Benefit Plan, based on actuarial valuations as of December 31, 2006 and 2007 carried out by an independent actuary, and of the Plano Previ Futuro as required by CVM Resolution 371 of December 13, 2000:





b.3) The economic assumptions adopted for the actuarial calculations are the same as those adopted for the PREVI Plan 3 (item a.3.), except regarding the adoption of mortality table AT -83., since a transitory table between GAM-71 modified and GAM-83 is used for the Informal Plan.

c) Fundação Codesc de Seguridade Social – Fusesc

Following the merger of Besc S.A. and Besc S.A. – Crédito Imobiliário (Bescri) by Banco do Brasil on September 30, 2008, the Bank became a successor to the sponsorship obligations for the following Private Pension Plans: a) Multifuturo I, a Defined Contribution Plan (CD) and b) Defined Benefit Plan (BD).

The normal contribution by the sponsors as of December 2000 was defined as being the sum of the contributions owed by active and assisted participants, in compliance with the contributing parity between sponsors’ normal contributions and participants, as provided for in article 5 of Constitutional Amendment no. 20/1998.

In addition to the funds transferred to Fusesc in order to settle Plano Multifuturo’s deficit, there is a provision of R$ 822 thousand on September 30, 2008 in connection with an actuarial deficit of active employees that remained in the Defined Benefit Plan. The provision’s value was defined in accordance with an agreement entered into with Fusesc on July 23, 2002, Clause 2”a”, item 2.2, as follows:

For those who did not migrate, only the complementary contribution of funds will be paid in, required to cover the actuarial deficit, in proportion to what they contributed (Sponsor and participants) until the effective date of Constitutional Amendment no. 20.

Multifuturo I, a Defined Contribution Plan (CD) – maintained by Fusesc, organized in June 2002 by means of the migration by participants from the Defined Benefit Plan. This plan covers 6,305 employees, of which 3,089 assisted (3,044 retired, 45 beneficiaries), and 3,216 active employees.

The Defined Benefit Plan (BD) – maintained by Fusesc since 1978, structured under a joint contribution plan with other companies, intended for their employees and dependents. This plan covers 1,376 employees, of which 1,371 assisted (1,022 retired, 349 beneficiaries), and 5 active employees. On September 30, 2008 this plan had an actuarial surplus of R$ 70,199 thousand.

The AT-83 mortality table was used for the actuarial calculation of the Defined Benefit Plan (BD), with the September 30, 2008 base date. The key assumptions employed in the actuarial appraisal are:




d) CASSI - Caixa de Assistência dos Funcionários do Banco do Brasil

The Bank is the sponsor of a Health Plan managed by CASSI - Caixa de Assistência dos Funcionários do Banco do Brasil. The main objective is to provide coverage for expenses related to the promotion, protection, recovery and rehabilitation of a member's health and of his/her inscribed beneficiaries. At September 30, 2008 this plan had 170,033 participants, with 89,143 active and 80,090 retired participants and pensioners (at September 30, 2007 the plan had 166,331 participants, of which 86,241 were active and 80,090 retired participants and pensioners).

A contract was executed between the Bank and CASSI on 11.13.2007 aiming at reformulating the By-laws of Plano de Associados da Caixa de Assistência dos Funcionários do Banco do Brasil (Plan of Members of the Banco do Brasil Employee Welfare Fund).

In the 1st semester of 2007, the Bank contributed monthly a sum equivalent to 150% of the total contributions from members (active and retired) and pension beneficiaries of employees hired before December 23, 1997. For participants employed after that date the Bank contributed a sum equivalent to 100% of their total contributions. On account of the Agreement between the Bank and CASSI, all the employee groups contributed with 4.5% of the total payroll or of the total retirement or pension plan benefit from November 2007, with effect retroactive to January 2007. Monthly contributions from members and pension beneficiaries amount to 3% of the total payroll or the total retirement or pension plan benefits.

d.1) Effects of the CASSI Plan on the financial statements, based on actuarial appraisals as of December 31, 2005 and 2006 carried out by an independent actuary, as required by CVM Resolution 371/12.13.2000: Equity effect (reconciliation of assets and liabilities):




The R$ 124,142 thousand is comprised of employer contributions from active employees, retirees and pensioners, and extraordinary contribution/onlending referring to the indirect dependents, resulting from the BB and CASSI Agreement and CASSI Complementation, as follows: Active Employees: R$ 44,797 thousand, Retirees and Pensioners: R$ 74,625 thousand, Onlending: R$ 2,500 thousand and Complemento Cassi, due to Resignation Plans: R$ 2,200 thousand;

The sum of R$ 103,299 thousand consists of the Employer Contributions for Active Employees: R$ 35,169 thousand and Retirees and Pensioners: R$ 68,130 thousand.




d.2) The economic assumptions adopted for the actuarial calculations are the same as those adopted for the PREVI Plan (item a.3.).

e) Policy for the recognition of actuarial gains and losses

In accordance with CVM Deliberation 371, the actuarial gains or losses to be recognized as income or expense in a defined benefit plan are the amount of unrecognized gains and losses that exceed, in each period, the higher of the following limits:

- 10% of the present value of the total actuarial liability of the defined benefit; or 10% of the fair value of plan assets.

e.1) Benefits of Sole Responsibility of the Bank: Actuarial losses relating to these benefits are being recorded in the same year the actuarial calculation is made because the persons involved are all former employees, and thus there is no remaining length of service to amortize.

e.2) CASSI Actuarial Liability: the actuarial losses relating to this liability are recognized over the average remaining work period estimated for the employees participating in the plan (15.9 years as of 12.31.2007).

f) Summary of Assets/Liabilities of Previ and Cassi

 
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