Banco Master Collapse Threatens Retirement Funds, Sparks Fraud Investigation
Rio de Janeiro – The liquidation of Banco Master following allegations of widespread fraud is poised to trigger a cascade of defaults impacting pension funds across brazil, perhaps necessitating future reforms to the country’s retirement system. A Folha de S.Paulo investigation reveals that R$1.86 billion in retirement savings were invested in the now-defunct bank, fueled in part by political connections and, in some cases, despite internal warnings.
The scandal centers on financial instruments sold by Banco Master, with investigators now scrutinizing the bank’s operations. The opening for investors was reportedly facilitated by the bank’s president’s relationships with prominent politicians.
Among the hardest hit are state-level pension entities. Rioprevidência, which closed 2024 with a deficit of R$17 billion, allocated approximately R$970 million to Master’s financial bills. Amprev (Amapá Previdência), facing a R$6.9 billion deficit, invested R$400 million. Both entities maintain that current benefit payments remain secure despite the losses.
However, the impact extends beyond large state funds. Smaller municipalities, including Cajamar, São Paulo (population 92,000), also participated, investing a considerable R$87 million – nearly depleting its R$34 million surplus from 2024 – in Banco Master.
Two managers at Caixa Econômica Federal reportedly lost their positions after objecting to a R$500 million investment in Master’s financial bills.
Authorities are currently investigating the fraud, and the unfolding crisis is expected to reignite debate over pension fund investment practices and the need for stricter regulations, potentially leading to new pension reforms under the guise of fiscal necessity.