Government bans pension funds for the super-rich

Photo: Andrzej Rostek/Shutterstock

The federal government on Monday limited exclusive pension funds for super-rich families to up to BRL 5 million (USD 1 million) in individual balances. The new rule is pending regulation before coming into effect.

The new rule was adopted in the context of reducing tax loopholes and increasing revenue. For example, in December, President Luiz Inácio Lula da Silva signed into law a bill to tax offshore investments and investment funds used by the super-rich.

The new measure will prevent funds in offshore investments from migrating to exclusive pension funds, where taxes are lower, especially for longer-term investments.

National Treasury Secretary Rogério Ceron said in an interview earlier this month that revenues from investment funds are “coming in strong,” an important step for the government to reach its zero-deficit goal in 2024.

Furthermore, earlier this month the National Monetary Council (CMN) issued stricter rules for the issuance of tax-free bonds and extended the maturity of agribusiness credit bills (LCA) from 90 days to nine months.

The National Council of Private Insurance (CNSP), which is responsible for setting guidelines and standards for private insurance, said in a statement that the new rules will create “more favorable conditions for the formation of pension savings in the country.”

The CNSP is composed of representatives from the Finance Ministry, the Justice Ministry, the Social Security Ministry, the Superintendence for Private Insurance, the Central Bank, and Brazil’s Securities Commission.