AFP profitability starts 2023 with losses

During January of this year, the profitability of three funds of the Pension Fund Administrators (AFP) registered accumulated losses at the interannual level.

In detail, the short-term yield of fund 1 —which brings together affiliates aged 60 or close to receiving a pension— fell 2.15% in nominal value. Meanwhile, fund 2 —which covers citizens between the ages of 45 and 60, who represent 91% of those registered in the AFPs— contracted by 3.85% and fund 3 —contributors up to 45 years of age— fell by 6.46%.

Only fund 0 —where members 65 years of age who are close to retire are— maintains a profit of 5.36%, according to data from the Superintendency of Banking, Insurance and AFP (SBS).

Recovery?

Aldo Ferrini, general manager of AFP Integra pointed out to La República that in January the funds had a recovery of up to 3%, which, despite the drop in the last twelve months, consolidates and generates optimism “of long-term recovery.”

“The important thing is that the historical profitability system exceeds 10%. In addition, more than 60% of the managed funds are the product of historical profitability,” he told the press during the support of his proposal to reform the pension system.

shared losses

Due to a bad 2022 in which the pension funds closed in negative, and about the criticism of the model in which users see how the money in their funds vanishes while the AFPs always operate to win, Ferrini considers that here “there is no they are losses.”

In dialogue with LR+ Economía, he argued that what is essential here is to establish a commission for performance so that the AFP only charges a certain percentage to manage the funds in the event that the cost effectiveness be negative.

“I think the question we all ask ourselves is why, in a year in which there is profit from the AFP business, there is loss and negative profitability. And that’s a discussion we’ve been having for a long, long time. And that short-term discrepancy is limited when we look at the long-term returns of the equity system. Pension funds and the returns of the AFPs”, said Ferrini.

It is important to mention that, during 2022, the AFPs registered a net profit of S/471 million 400,000. At the company level, AFP Integra was the only one that generated higher profits compared to the last two years with S/149 million 400,000.

Ferrini: New retirement would be irresponsible

Given the low performance of the funds during 2022, from the Congress it is seeking to approve a new withdrawal of up to S/19,800 from the AFPs.

In this regard, Aldo Ferrini, general manager of AFP Integra, hopes that this initiative will not prosper in Parliament.

“The fund would be withdrawn by workers who today have an income. I think it would be irresponsible,” he said.