Petroleo Brasileiro SA, Rio de Janeiro, expects to contribute 13.6 billion Brazilian reais ($2.9 billion) to two of its pension plans over the next 25 years, the oil and gas company announced on its website.
The contribution to its Renegotiated and Non-Renegotiated pension plans is the result of a "New Deficit Equation Plan," which reviews the prior deficit equation plan of 2015, the treatment of the deficit in 2018 and utilizes an actuarial study in 2019.
As a result of these studies, it is "possible to reduce the extraordinary contributions for most of the participants and beneficiaries, as well as to improve the regulations of the plans, which will allow the revision of the regular contributions and will mitigate the need for new equation plans in the future," the website said.
The contribution for the first year is estimated at 941 million Brazilian reais, or $203 million.
Petroleo Brasileiro split its pension plan, which had been closed to new participants since September 2002, into a Renegotiated Plan and Non-Renegotiated Plan in April 2018. The company contributed $166 million to the plans in 2018, according to its most recent 20-F filing with the SEC.
As of Dec. 31, 2018, the Renegotiated Plan had $7.151 billion in assets, with benefit obligations totaling $16.688 billion, for a funding ratio of 42.9%, and the Non-Renegotiated Plan had $2.492 billion in assets, with benefit obligations totaling $5.373 billion, for a funding ratio of 46.4%, according to the 20-F filing.