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Employees benefits
 12 Months Ended
Dec. 31, 2023
Employees Benefits  
Employees benefits

 

19.Employees benefits
19.1.Supplementary pension plans

The Company is the sponsor of the following pension plans for its employees and executives: i) Plan II – Variable Contribution with Defined Benefit option – closed for admissions; ii) Plan III – Defined Contribution – open for admissions; and iii) FAF Plan – Defined Benefit - closed for admissions.

These plans are managed by BRF Previdência, a closed supplementary pension entity, of non-economic and non-profit nature, and through its Deliberative Board, is responsible for defining pension objectives and policies, as well as establishing fundamental guidelines aa well as organization, operation and management rules. The Deliberative Board is composed of representatives from the sponsor and participants, in the proportion of 2/3 and 1/3 respectively.

19.1.1.Defined benefit plans

The Plan II is a variable contribution plan structured as defined contribution during the accumulation of mathematic provisions and at the benefit grant date the beneficiary may choose to convert the accumulated balance in a lifetime monthly income (defined benefit). The main related actuarial risks are (i) survival rates above the mortality tables and (ii) actual return on equity below the actual discount rate.

The FAF (Fundação Attílio Francisco Xavier Fontana) Plan aims to complement the benefit paid by the Brazilian Social Security (“INSS – Instituto Nacional de Seguridade Social”). The benefit is calculated based on the

income of the participant and the amounts vary according to the type of the retirement and other criteria defined by the plan. The main actuarial risks related are: (i) survival rates above the mortality tables, (ii) turnover lower than expected, (iii) salary growth higher than expected, (iv) actual return on equity below the actual discount rate, (v) changes to the rules of social security, and (vi) actual family composition of the retired employee or executive different than the established assumption.

The actuarial calculations of the plans managed by BRF Previdência are prepared annually by independent specialists and reviewed by Management, according to the rules in force.

In the case of a deficit in the plans results, in amounts higher than those defined by legislation, the sponsor, the participants and the beneficiaries, must support the plan according to the proportion of their contributions.

The economic benefit presented as an asset considers only the portion of the surplus that is actually recoverable. The recovery of the surplus on the plans is through reductions in future contributions.

19.1.2.Defined contribution plan

The Plan III is a defined contribution plan, in which the contributions are known and the benefit depends directly on the contributions made by participants and sponsors, on the contribution time and on the returns obtained through the investment of the contributions. The contributions made by the Company in the year ended December 31, 2023 amounted R$26,911 (R$25,507 for the year ended December 31, 2022). On December 31, 2023, the plan had 35,644 participants (39,715 participants as of December 31, 2022).

When the participants of the Plans II and III terminate the employment relationship with the sponsor, the unused balance of the contributions made by the sponsor forms a surplus fund that may be used to compensate future contributions of the sponsor.

19.1.3.Rollforward of defined benefit and variable contribution

The assets and actuarial liabilities, as well as the movement of the related rights and obligations are presented below:

 

               
  FAF   Plan II
  12.31.23   12.31.22   12.31.23   12.31.22
Composition of actuarial assets and liabilities              
Present value of actuarial liabilities  3,348,786    3,121,348     21,789     20,822
Fair value of assets   (3,647,431)     (3,603,611)    (22,845)    (22,745)
(Surplus) Deficit   (298,645)     (482,263)   (1,056)   (1,923)
Irrecoverable surplus - (asset ceiling) 298,645   482,263    1,056    1,923
Net actuarial (assets) liabilities   -     -     -     -
               
Rollforward of irrecoverable surplus              
Beginning balance of irrecoverable surplus 482,263   207,230    1,923     -
Interest on irrecoverable surplus   47,021     18,152    187     -
Changes in irrecoverable surplus during the year   (230,639)   256,881   (1,054)    1,923
Ending balance of irrecoverable surplus 298,645   482,263    1,056    1,923
               
Rollforward of present value of actuarial liabilities              
Beginning balance of the present value of liabilities  3,121,348    3,340,497     20,822     23,981
Interest on actuarial obligations 293,231   283,241    1,935    1,997
Current service cost   18,153     23,189     -     -
Benefit paid   (233,865)     (213,804)   (1,947)   (1,838)
Actuarial losses - experience   81,782    (36,292)    460   (1,358)
Actuarial (gains) losses - economic hypotheses   68,137     (242,957)    519   (1,414)
Actuarial (gains) losses - demographic hypothesis   -    (32,526)     -     (546)
Ending balance of actuarial liabilities  3,348,786    3,121,348     21,789     20,822
               
Rollforward of the fair value of the assets              
Beginning balance of the fair value of plan assets   (3,603,611)     (3,547,727)    (22,745)    (22,298)
Interest income on assets plan   (340,252)     (301,394)   (2,122)   (1,851)
Benefit paid 233,865   213,804    1,947    1,838
Return on assets higher (lower) than projection   62,567     31,706   75     (434)
Ending Balance of the fair value of the assets   (3,647,431)     (3,603,611)    (22,845)    (22,745)
               
Rollforward of comprehensive income              
Beginning balance   23,190     26,741    3,385   (2,485)
Reversion to accumulated losses  (23,190)    (26,741)   (3,385)    2,485
Actuarial gains (losses)   (149,919)   311,776     (979)    2,772
Return on assets higher (lower) than projection  (62,567)    (31,705)    (75)    434
Changes on irrecoverable surplus 230,639     (256,881)    1,054    179
Ending balance of comprehensive income   18,153     23,190     -    3,385
               
Costs recognized in statement of income              
Current service costs (18,153)   (23,190)     -     -
Interest on actuarial obligations   (293,231)     (283,241)   (1,935)   (1,997)
Projected return on assets 340,252   301,394    2,122    1,851
Interest on irrecoverable surplus  (47,021)    (18,153)     (187)     -
Costs recognized in statement of income  (18,153)    (23,190)     -     (146)
               
Estimated costs for the next year              
Costs of defined benefit  (19,226)    (18,153)     -     -
Estimated costs for the next year  (19,226)    (18,153)     -     -

 

19.1.4.Actuarial assumptions and demographic data

The main actuarial assumptions and demographic data used in the actuarial calculations are presented below:

 

             
  FAF   Plan II
  12.31.23   12.31.22   12.31.23   12.31.22
Actuarial assumptions              
Economic hypothesis              
Discount rate 9.54%   9.75%   9.43%   9.73%
Inflation rate 3.50%   3.50%   3.50%   3.50%
Wage growth rate 4.60%   4.60%   N/A   N/A
Demographic hypothesis              
Mortality schedule AT-2000 Basic, by gender   AT-2000 Basic, by gender   AT-2000 Basic, by gender   AT-2000 Basic, by gender
Mortality schedule - Disabled CSO-58   CSO-58   CSO-58   CSO-58
Demographic data              
   Number of active participants 5,314   5,669                       -                          -   
   Number of beneficiary participants assisted  7,972   7,884   51   51

 

19.1.5.The composition of the investment portfolios

The composition of the investment portfolios is presented below:

                               
    FAF   Plan II
    12.31.23   12.31.22   12.31.23   12.31.22
Composition of the fund's portfolio                                
Fixed income     2,607,913   71.5%    2,385,591   66.2%    20,629   90.3%   19,969   87.8%
Variable income     339,211   9.3%   421,622   11.7%   937   4.1%     1,115   4.9%
Real estate     368,391   10.1%   342,343   9.5%     23   0.1%   23   0.1%
Other     331,916   9.1%   454,055   12.6%   1,256   5.5%     1,638   7.2%
      3,647,431   100.0%    3,603,611   100.0%    22,845   100.0%   22,745   100.0%
% of nominal return on assets   9.44%       8.50%       9.33%       8.30%    

 

19.1.6.Expected benefit payments and average term of payments

The following amounts represent the expected benefit payments for future periods and the average duration of the plan’s obligations:

     
  FAF   Plan II
2024 240,517    1,954
2025 239,946    1,935
2026 239,731    1,914
2027 240,288    1,888
2028 239,854    1,859
2029 to 2033  1,223,676    8,698
Weighted average duration - in years  10.95   8.88

 

19.1.7.Sensitivity analysis of the defined benefit plan - FAF

The quantitative sensitivity analysis regarding the relevant assumptions of defined benefit plan – FAF on December 31, 2023 is presented below:

 

                   
    Assumptions utilized   Variation of (+1%)   Variation of (-1%)
Relevant assumptions     Average rate   Actuarial liabilities   Average rate   Actuarial liabilities
Benefit plan - FAF                    
Discount rate   9.54%   10.54%     3,031,526   8.54%     3,729,735
Wage growth rate (1)   1.06%   2.06%     3,373,686   0.06%     3,322,461

(1)  Actual rate.

 

19.2.Employee benefits: description and characteristics of benefits and associated risks
               
      Liabilities
          12.31.23   12.31.22
Medical assistance           66,245   119,729
F.G.T.S. Penalty (1)           70,535     60,657
Award for length of service         125,991   112,225
Other         278,050   228,701
          540,821   521,312
               
Current           86,423     64,367
Non-current         454,398   456,945
(1)FGTS – Government Severance Indemnity Fund for Employees.

 

The Company has the policy to offer the following post-employment and other employee benefits plans in addition to the pension plans, which are measured by actuarial calculation and recognized in the financial statement:

19.2.1.   Medical plan

The Company offers a medical plan with fixed contribution to the retired employees according to the Law No. 9,656/98.

It is ensured to the retired employee that has contributed to the health plan during the employment relationship for at least 10 years, the right of maintenance as beneficiary, on the same conditions of coverage existing when the employment contract was in force. The main related actuarial risks are (i) survival rates above the mortality tables, (ii) turnover lower than expected and (iii) medical costs growth higher than expected.

19.2.2.   F.G.T.S. penalty by dismissal on retirement

As settled by the Regional Labor Court (“TRT”) on April 20, 2007, retirement does not affect the employment contract between the Company and its employees. However, when the employee is retired through INSS and is dismissed from the Company, the Company may, in certain cases, enter into a mutual agreement granting the payment of the benefit equivalent to the 20% penalty on the F.G.T.S. balance. The main related actuarial risks are: (i) survival rates above the mortality tables, (ii) turnover lower than expected and (iii) salary growth higher than expected.

19.2.3.   Award for length of service

The Company has the policy to reward active employees that attain at least 10 years of services rendered and subsequently every 5 years, with an additional remuneration. The main related actuarial risks rare, (i) turnover lower than expected, (ii) salary growth higher than expected and (iii) survival rates above the mortality tables.

19.2.4.   Other - Brazil

i.Retirement compensation

On retirement, employees with more than 8 years of services rendered to the Company are eligible for additional compensation. The main actuarial related risks are (i) turnover lower than expected, (ii) salary growth higher than expected and (iii) survival rates above the mortality tables.

ii.Life insurance

The Company offers life insurance benefits to the employees who, at the time of their termination, are retired and during the employment contract opted for the insurance, with the period of benefit varying from 2 to 3 years. The main related actuarial risks are (i) survival rates above the mortality tables, (ii) turnover lower than expected and (iii) salary growth higher than expected.

19.2.5.   Other – foreign entities

The Company has a liability recorded for defined benefit plans to certain subsidiaries located in Turkey, Saudi Arabia, Qatar, United Arab Emirates, Oman and Kuwait, related to end of service payments when certain conditions are met, which varies based on the labor laws for each country. The main related actuarial risks

are: (i) survival rates above the mortality tables, (ii) turnover lower than expected and (iii) salary growth higher than expected.

19.2.6.   Rollforward of actuarial liabilities

The rollforward of actuarial liabilities related to other benefits, which was prepared based on actuarial report reviewed by the Management, are as follows:

                               
    Medical plan   F.G.T.S. penalty   Award for length of service   Other (1)
    12.31.23   12.31.22   12.31.23   12.31.22   12.31.23   12.31.22   12.31.23   12.31.22
Composition of actuarial liabilities                                
Present value of actuarial liabilities     66,245   119,729     70,535     60,657   125,991   112,225   278,050   228,700
Net actuarial liabilities     66,245   119,729     70,535     60,657   125,991   112,225   278,050   228,700
                                 
Rollforward of present value of actuarial liabilities                                
Beginning balance of present value of actuarial liabilities   119,729   195,345     60,657     53,881   112,225     98,474   228,700   203,202
Interest on actuarial liabilities     11,434     16,805    5,052    4,071     10,104    7,997     16,947     15,388
Current service costs    508    678    2,669    2,480    5,707    5,221     22,123     22,804
Past service costs     -     -     -     -     -     -    3,326     -
Benefits paid directly by the Company   (4,562)   (8,811)   (4,937)   (11,482)   (16,201)   (14,542)   (44,141)   (26,633)
Business combination     -     -     -     -     -     -     -     -
Actuarial (gains) losses - experience    (62,276)    (55,928)    5,938     13,589     12,745     17,357   103,847     15,764
Actuarial (gains) losses - demographic hypothesis     -    (12,325)     -    2,237     -    1,935     (6,504)    1,623
Actuarial (gains) losses - economic hypothesis    1,412    (16,035)    1,156     (4,119)    1,411     (4,217)     (6,747)     19,775
Actuarial (gains) losses - exchange variation     -     -     -     -     -     -    (39,501)    (23,223)
Ending balance of liabilities     66,245   119,729     70,535     60,657   125,991   112,225   278,050   228,700
                                 
Rollforward of the fair value of the assets                                
Benefits paid directly by the Company    4,562    8,811    4,937     11,482     16,201     14,542     44,141     26,633
Contributions of the sponsor     (4,562)     (8,811)     (4,937)    (11,482)    (16,201)    (14,542)    (44,141)    (26,633)
Ending Balance of the fair value of the assets     -     -     -     -     -     -     -     -
                                 
Rollforward of comprehensive income                                
Beginning balance     49,568    (34,720)     (5,071)    6,636     -     -    (84,008)    (84,050)
Actuarial gains (losses)     60,864     84,288     (7,094)    (11,707)     -     -    (90,596)    (37,162)
Exchange variation      -     -     -     -     -     -     40,331     37,204
Ending balance of comprehensive income   110,432     49,568    (12,165)     (5,071)     -     -     (134,273)    (84,008)
                                 
Costs recognized in statement of income                                
Interest on actuarial liabilities    (11,434)    (16,805)     (5,052)     (4,071)    (10,104)     (7,997)    (16,947)    (15,388)
Current service costs     (508)     (678)     (2,669)     (2,480)     (5,707)     (5,221)    (22,123)    (22,804)
Past service costs         -     -     -     -     -     (3,326)     -
Immediate recognition of reduction     -     -     -     -    (14,156)    (15,075)     -     -
Cost recognized in statement of income    (11,942)    (17,483)     (7,721)     (6,551)    (29,967)    (28,293)    (42,396)    (38,192)
                                 
Estimated costs for the next year                                
Current service costs    (19)     (508)     (3,021)     (2,669)     (6,146)     (5,707)    (30,317)    (22,804)
Interest on actuarial liabilities     (6,268)    (11,434)     (5,669)     (5,052)    (10,893)    (10,104)    (35,728)    (15,388)
Estimated costs for the next year     (6,287)    (11,942)     (8,690)     (7,721)    (17,039)    (15,811)    (66,045)    (38,192)
(1)Considers the sum of the retirement compensation, life insurance benefits and compensation for time of service granted in certain subsidiaries of Company.

 

19.2.7.   Actuarial assumptions and demographic data

The main actuarial assumptions and demographic data used in the actuarial calculations are summarized below:

                       
    Medical plan   F.G.T.S. penalty   Other (1)
Actuarial assumptions   12.31.23   12.31.22   12.31.23   12.31.22   12.31.23   12.31.22
Economic hypothesis                        
Discount rate   9.61%   9.73%   9.42%   9.66%   13.77%   8.71%
Inflation rate   3.50%   3.50%   3.50%   3.50%   11.75%   4.88%
Medical inflation   6.60%   6.60%   N/A   N/A   N/A   N/A
Wage growth rate   N/A   N/A   3.50%   3.50%   8.34%   4.88%
F.G.T.S. balance growth   N/A   N/A   3.41%   3.70%   N/A   N/A
Demographic hypothesis                        
Mortality schedule    AT-2000 Basic by gender     AT-2000 Basic by gender     AT-2000 Basic by gender     AT-2000 Basic by gender         
Disability entry schedule    N/A     N/A     Vindas Álvaro's attenuated 30%     Vindas Álvaro's attenuated 30%         
Schedule of turnover - BRF's historical   2023   2022   2023   2022        
Demoraphic data                        
Number of active participants   1,015     13,776   92,120     91,490        
Number of assisted beneficiary participants   1,415   1,610    -     -        

 

19.2.8.   Expected benefit payments and average duration of obligations

The following amounts represent the expected benefit payments for future years (10 years), from the obligation of benefits granted and the average duration of the plan obligations:

                   
Payments   Medical plan   F.G.T.S. penalty   Award for length of service   Other   Total
                     
2024   2,016   20,718   20,704   42,985   86,423
2025   2,350   4,955   16,507   19,058   42,870
2026   2,773   5,652   16,355   20,007   44,787
2027   3,212   6,385   15,453   21,680   46,730
2028   3,603   6,237   18,939   22,861   51,640
2029 to 2033   25,324   41,929   86,808   221,431   375,492
Weighted average duration - in years   15.62   5.59   5.15   9.61    

 

19.2.9.   Sensitivity analysis of post-employment plans

The Company prepared sensitivity analysis regarding the relevant assumptions of the plans as of December 31, 2023, as presented below:

                   
    Assumptions utilized   (+) Variation   (-) Variation
Relevant assumptions     Average (%)   Actuarial liabilities    Average (%)   Actuarial liabilities 
Medical plan                    
Discount rate   9.61%   10.61%    56,322   8.61%    78,929
Medical inflation   6.60%   7.60%    78,902   5.60%    56,260
Award for length of service                    
Discount rate   9.42%   10.42%     120,327   8.42%     132,249
Turnover   Historical   +3%     107,233   -3%     151,251
F.G.T.S. penalty                    
Discount rate   9.42%   10.42%    67,125   8.42%    74,375
Wage growth rate   3.50%   4.50%    71,226   2.50%    69,899
Turnover   Historical   +3%    59,720   -3%    86,071