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Report: BNDES facing headwinds on employee pension fund fix

Banco Nacional de Desenvolvimento Econômico e Social's board is facing opposition to its proposed solution to a shortfall in the pension fund for its employees, known as Fapes, O Estado de S. Paulo reported.

At the end of 2016, the pension fund's recently installed management team presented a plan to address a so-called "actuarial deficit" 2.5 billion Brazilian reais. The proposal reportedly seeks to narrow the gap by some 953 million reais through contributions from both the state-run development bank and its employees.

The association that represents the fund's participants, however, will file a lawsuit to suspend the plan, claiming that it will increase the amount that retirees would have to contribute, according to the report.

In July 2016, Brazil's federal audit court, the TCU, denied the bank's request to dismiss charges against former executives, including ex-CEO Luciano Coutinho, tied to the alleged embezzlement of 447.6 million reais of public funds into Fapes.

With investments amounting to 9.7 billion reais and 5,200 participants, Fapes is among Brazil's 10 largest pension funds.

As of Jan. 18, US$1 was equivalent to 3.22 Brazilian reais.