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They propose that the AFPs do not charge commissions if there is negative profitability

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In a context where pension funds have had significant falls as a result of negative profitability, especially in fund 1, which has accumulated five months of losses, since the Congress initiatives are presented so that these adverse scenarios are not assumed only by the affiliates, but also by the Pension Fund Administrators (AFP).

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So the congressman Carlos Zeballos of the parliamentary group Democratic Peru On May 17, he presented a bill that seeks to establish that the losses of the funds be shared between the AFPs and affiliates, and also proposes to regulate commissions and allow affiliates to participate in their directories and in those of the companies in which they invest. the administrators.

The detail

According to the bill, which must be analyzed by the Congressional Economy Commission, it is proposed that the AFPs do not charge commissions when the profitability of any of the funds is negative.

“Losses of the pension fund caused by market risks, by internal or external financial crises or for any reason, will be assumed equally by the affiliates and the AFPs,” the legislative proposal specifies.

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Luis Mendiola, Professor of Finance at ESAN Graduate School of Business, points out that It is a quite sensible proposal and it is similar to what is adopted in other countries, however, it specifies that clarifications must still be made in the final text so that it is not misunderstood and can fulfill its objective.

“A lot of details are missing. It is a document that is full of good intentions, but the issue is regulation,” the professor mentioned, adding that the current situation warrants such a measure, given the discomfort of AFP members.

The legislative initiative also proposes that the commission have a fixed component, which would cover the real costs and must be regulated by the Superintendence of Banking, Insurance and AFPs (SBS); and a variable segment, which would be based on the performance or profitability of the funds. In other words, “if profitability is low, the commission will be proportionally low; if profitability is high, the commission will be higher, with the exception that its application combined with the minimum percentage commission must be less onerous than the current one”.

Finally, it is suggested that members be allowed to have a representative on the AFP boards and in those companies in which the administrators have the right to have directors.

The data

Initiative. In 2017, AFP Integra proposed a performance commission scheme to Congress, but to date it has not been approved.

Utilities. The AFPs recorded profits of S/ 553 million 58,600 at the end of 2021.

Source: Larepublica

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