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Caixa Econômica Federal to inject 3.9B reais to cover pension fund shortfall

Caixa Econômica Federal and the participants of its employee pension fund Funcef will need to inject 7.7 billion Brazilian reais to cover the fund's shortfall, O Estado de S. Paulo reported.

Half of this amount will be paid by the state-run bank, while the other half will be deducted from the payment of its 62,500 employees, the report said.

Sources told the publication, however, that the bank may not be obliged to immediately make the full payment, in order to avoid a significant negative impact on the bank's results, according to the Dec. 12 report.

As the third largest pension fund in the country, Funcef has had deficits since 2011.

Pension fund shortalls from Brazil's state-owned companies were investigated by a congressional inquiry, which indicted 145 people suspected of involvement in corruption schemes. Funcef's allegedly suspect investments include bankrupted oil rig producer Sete Brasil, which was also noted in the "Lava Jato" corruption scandal.

In September, Brazil's federal police launched an inquiry into a fraud case that involves the country's four largest state-run pension funds, including Funcef and Banco do Brasil SA's Previ, freezing assets worth about 8 billion reais in current accounts from individuals and corporations due to alleged crimes of fund mismanagement.

As of Dec. 12, US$1 was equivalent to 3.35 Brazilian reais.