The recent protests by pensioners of the pension fund Real Grandeza show the deep conflict of interests that infects the Brazilian securities market, which goes far beyond the dispute of posts in pension funds' boards by the political parties that make up the basis of the Brazilian government.

Pension funds as FUNCEF, TELOS, PETROS, PREVI, NUCLEOS, PORTUS, CAPAF, Real Grandeza (among 34 other pension funds that are virtually controlled by government ministers) decide how to invest about 400 billion dollars, which is the value invested in stocks belonging to these various funds. So the pension funds have a lot of influence on the stock exchanges of Brazil.

The control of these funds by the government is so pervasive that the ministers hold the power to point out, fire or keep in office, the directors and president of the CVM (Brazilian Securities and Exchange Commission), which is the division that should oversee and curb irregularities as the traffic of privileged information and conflicts of interest in the securities market.

The pensioners of these funds, whose directors are kept in office by ministers, are worried because they know that the staff and the board of directors that establish and operate the investment policies of these funds are not as independent as they should be in order to invest prudently safeguarding the interests of pensioners and beneficiaries of these funds.

Instead, what actually happens is the "strategic use" of the influence of these funds in the stock and securities market in Brazil, to ensure the profitability of businesses and enterprises that are indirectly controlled by government, some of them are Petrobras, Vale, Eletrobras, Embraer and the Bank of Brazil itself.

These pensioners fear that they may have the same fate of pensioners from the Rubem Berta Foundation / VARIG. That is, investment policies that are not addressed in the interest of the pensioners are most likely leading to the wastage of these funds' reserves, which are great but not infinite.

Infinite are the funding needs of the businesses controlled by the government, especially in a period of crisis and instability in the stock market. Critical moment that sharpens the conflict between the right of pensioners to maintain healthy reserves and the willingness of the Brazilian government to have the shares of its companies keeping its value, even when there is fleeing of capital from this market that significantly reduced the price and profitability of the shares of companies such as Petrobras, Eletrobras, Vale, Embraer among others that have indirect control of the Federal Government or its associates and business partners, such as BNDES (Brazilian National Development Bank).

Even after the "privatization" of infrastructure sector companies in Brazil the government continues to have strong interest and a lot of money invested in these companies. In addition, the business groups that align with the government are also benefited by the movement of capital promoted by the direction given to the investments of pension funds. The size of the reserve belonging to these funds naturally places them among the most influential investors in the Brazilian market, and decisions on their investments carries along other investors, creating a real trend of the market.

The investment policy of these funds should be the transparent and the criterion for prudent investment should rule. These criterion teach us that to protect large reserves against the changes in market value there should be diversification of investments in relation to geographic location of these investments, the type of economy sector of the investments and the format of these investment

For many of these funds the largest share of their reserves is invested in securities of the Brazilian government itself, which at times of a more favorable market earned more, and so, no question was being raised. But a crisis always shows where the bubbles and hot spots are.

One of the possible solutions is that society organizations, trade unions, associations of employees, pensioners and retirees have the right to form a council within the pension funds. This council would point out a technically skilled person or company to be part of the board and evaluate investment policies. These experts would have the function of publishing widely in the press assessments of the investment policies of these funds, these opinions would also be evaluated and criticized by independent audits.

There should be a broad debate on the issue and the need to create other mechanisms for transparency in investment policies of all pension funds, and particularly those under the control of the government, or in a few decades, those who contribute to these funds today may not have their pensions and benefits guaranteed in the future.