Profits. For commissions from their affiliates, the four companies in the system reported income that exceeded S/1,173 million. Meanwhile, the annual profitability of most of the pension funds closed in negative.
Despite the fact that it was not a good year for the profitability of the pension funds, the Pension Fund Administrators (AFP) registered a net profit of S/471 million 400,000 at the end of 2022, according to data from the Superintendency of Banking, Insurance and AFP (SBS).
And although last year’s profits represent 14.9% less than what was registered in 2021, when they exceeded S/553 million; it is still 13% higher than what was achieved during 2020 (S/414 million).
At the level of companies, AFP Integra was the only one that generated higher profits compared to the last two years with S/149 million 400,000, which represents an increase of 1.6% compared to 2021 and 18% compared to 2020.
For its part, Prima AFP reported profits of S/146 million 400,000, 22% less than in 2021. Meanwhile, Profuturo achieved a profit of S/124 million 400,000, 25% lower than that obtained in the previous year. AFP Habitat, for its part, reached S/51 million 200,000 during 2022, which implies a 3.2% decrease in profits.
Arturo García, professor of Finance at ESAN Graduate School of Business, points out that, although the reported profits are lower than in 2021, companies have done quite well, taking into account the complex international environment and the withdrawals of funds from pensions authorized by Congress.
“Withdrawals have also made the amount of pensions they managed less, therefore, the commissions for their administration have decreased. On the other hand, the AFPs also have a reserve fund, which has been affected by the financial market. Those are the two main factors that have made their profits in 2022, which are not bad, but good, have been less than in 2021,” said the professor.
Profitability in the red
Another factor that affected the profits of the AFPs was the drop in the profitability of the pension funds throughout 2022, although the greatest impact is borne by the affiliate, since this generates a decrease in their individual capitalization accounts.
At the end of 2022, the short-term profitability of most of the funds –with the exception of fund 0– registered losses.
Thus, Fund 1, which houses members closest to retirement age, registered a drop of -5.38% in its annual return. While Fund 2, which manages the pension savings of the great bulk of affiliates to the AFPs (91%), had a decline of -7.15% in its performance.
Meanwhile, Fund 3 –the most risky– had a variation of -7.55% in its profitability in the last year. For its part, Fund 0, considered the least risky, was the only one that had a good year and registered +4.74% of cost effectiveness.
Income
Breaking down the financial information of each AFP, it can be seen that, by concept of commissions, the entire private pension system, which is made up of only four administrators, obtained income of S/1,173 million 653,000, barely 1.1% below what was reported in 2021.
“The bulk of the profits of the AFPs, the main item logically, are from the commissions they charge for the administration of the pension fund. That is the core of the business; that additionally they can have a greater amount of income from the investment of their Own funds as a company, yes, but it is not relevant,” García pointed out to this medium.
Commissions according to the performance of the funds
The fall in the profitability of the funds during 2022 and the dissatisfaction of the affiliates for having to pay commissions to the AFPs despite the fact that they report losses have caused that from the beginning Congress alternatives are proposed.
Thus, congresswoman Rosangella Barbarán, from the Fuerza Popular bench, proposes establishing a compensation mechanism according to the productivity of the funds managed by the Private Pension System (SPP). In other words, the commissions are based on the performance of each fund.
This is not the only proposal, since on one occasion AFP Integra proposed that a part of what is charged for commission be paid only if profitability is generated.
The numbers
S/373 million in commissions reported by Prima AFP during 2022.
AFP Integra’s net income grew 2.3% in the fiscal year of last year.
Source: Larepublica
Alia is a professional author and journalist, working at 247 news agency. She writes on various topics from economy news to general interest pieces, providing readers with relevant and informative content. With years of experience, she brings a unique perspective and in-depth analysis to her work.
