To the Members of the Association of Retirees of the IDB Group:
In my position as Coordinator of the Retirement Plan Committee, the Board of Directors has asked me to share the main conclusions of the recent meeting of the Administration Committee of the Plans (July 24). At this meeting, the Executive Secretariat of the Retirement Plans and the external Actuaries, who evaluate the plans, highlighted the sustainability and financial strength of the plans despite the ups and downs in international markets and the current period of global crisis.
In the same way, in this meeting, it was highlighted that the reforms carried out during 2011-2014 and the implementation of financial and risk policies that make possible the financial sustainability and viability of the plans (such as the Bank’s adoption of policies for long-term financing and investment risks for the plans) have increased their strength and solidity to manage the volatility and mismatches of the international investment markets.
In this context, it is important to emphasize that the investment funds supporting the financing of retirement plans have highly liquid reserve funds that make possible, even in periods of crisis such as the current one, the sustainability of the plans and therefore reinforce the implicit guarantee of payment of pensionable obligations for life. The reserve funds were created and have been increased during the boom period in the markets, precisely in anticipation of financial crises like the one we are currently experiencing.
At the close of the 2019 annual fiscal year exercise, the investments in the funds presented exceptional returns of more than 20% (more than three times higher than what is needed for the financing of the plans to be sustainable). At the end of the first semester of this 2020, even under conditions of high volatility in the markets, the value of the assets in the investment funds decreased less than 2% of the levels at the end of 2019, thus confirming the resistance and solidity in the financing of the plans and its prospects for payment of pensionable obligations.
The Association of Retirees, through its representatives on the Governance Boards of the Plans, will continue to look after the retirees’ interests, and will periodically report on the status of the Plans to its members.
Kurt Focke, Retirement Plan Committee Coordinator