Annual
Report 2013

Despite the age disparity, both Mrs. Melo and Mr. Paulineli use retirement planning to afford a quality education for their children. Mrs. Melo is making plans for little Felipe to have a financial reserve to study abroad when he becomes a teenager. In turn, Mr. Paulineli's daughter – 17-year-old Thais – is about to go to college and can count on the funds they accumulated throughout the years in her plan.

The year 2013 saw the beginning of a cycle of growth and change in the global economy. After a long period of uncertainty and worry about the performance of the main global economies, Europe started to make a comeback, Japan was growing again, China decided to prioritize their domestic economy, and the United States had clear signs of an economic recovery, despite the difficulties inherent in any adjustment process.

Because of the American recovery, the Federal Reserve announced the end of the economic stimulus to start the process of raising the prime interest rate from 0.00% to 0.25%.

The new economic reality implies complex adjustments to the global interest and exchange rates. Emerging nations are particularly trying to adapt to the new macroeconomic conditions and trigger effects that are specific to their respective standing in the global market. In turn, Brazil is adapting to the new scenario by keeping a dynamic domestic consumption and increasing the job creation and income levels.

Throughout the year, Brazil changed their exchange and interest rates as the financial market underwent a period of high volatility.

This state of affairs affected the entire investment fund industry, which, in 2013, went through a period of more intense volatility, including in fixed-income investments because of mark-to-market fixed-rate securities, which are indexed to inflation. The key factors that brought about the change were the pressure from adjusted American bonds, a stronger US dollar, and an increased prime rate (the SELIC rate) in Brazil.

Industry Performance

In addition to the volatility scenario, new rules were established to extend the maturity of securities tied to retirement funds in 2013, which led to an atypical year.

Despite of all this, the market continued to expand during this period. According to the Brazilian Retirement and Annuity Federation (FenaPrevi, acronyms in Portuguese), the industry's total revenue had a 4.6% year-to-date increase, which was largely driven by the VGBL product, with BRL 62.1 billion in deposits, a 4.3% gain over the previous year. In turn, the PGBL product raised BRL 7.8 billion, a 5.1% increase. At the end of FY 2013, the industry had BRL 373.9 billion in assets, a 12.8% gain over 2012.