BCRP suggests that the minimum pension be based on the years of contributions

With the aim of preparing a proposal for the reform of the Peruvian pension system, the Labor and Social Security Commission of the Congress has been carrying out work groups to gather the initiatives of the social actors, among them the Central Reserve Bank of Peru (BCRP) and the Association of AFPs (AAFP).

Thus, the point where everyone agrees is that the new pension system must establish a minimum pension.

As explained by the BCRP representative, Fernando VasquezIn the Private Pension System (SPP) -made up of the AFPs- there is no minimum pension, with the exception of a small group of contributors.

Meanwhile, in the National Pension System (SNP) there is a minimum pension of S/500 for those members who complete the 20 years of contributions. In addition, proportional pensions from S/250 were established for those who contributed ten years, as well as pension loans so that they can access a pension.

In this sense, from the BCRP they propose that both the public and private systems establish a minimum pension based on the years of contribution of the member.

“The suggestion is that there must also be a minimum pension system in the private pension system and that obviously must be based on the years of contribution,” the official affirmed.

Giovanna Prialepresident of the AFP Association, also agrees with the BCRP’s vision and points out that the minimum pension must be guaranteed in the new system.

“This minimum pension, although it has to be aimed at those who today belong to the public system and the private system and contribute regularly, should not leave aside the fact that there must be a minimum level of social protection related to avoiding poverty in old age,” he pointed out, adding that the new system must incorporate independent and informal workers.

Expand Pension 65

The BCRP also proposes that the Pension 65 program be extended to all poor citizens aged 65 or over who do not receive a pension.

This is because, as of December 2021, there were 569,000 beneficiaries, however, there were 249,000 citizens in a situation of monetary poverty who did not receive a pension, therefore, it suggests that this unattended group be incorporated. Likewise, it considers that the pension allocated to this social program should be raised based on the age of poor people of retirement age, since the income from work of the elderly is significantly reduced after the age of 70 years.

Establish a commission for performance

The AFPs have also proposed the creation of a performance commissionwhich would be an additional alternative to the commissions that currently exist in the Private Pension System.

The performance commission would be made up of a fixed component on the new balance generated, to cover operating costs, and a variable component associated with positive profitability in a given period.

The BCRP proposes greater competition. Thus, it suggests that the SNP be transformed into a system of national individual accounts, with a return based on the interest rate of the Peruvian Treasury Bond.

The data

Management. For the monetary entity, it should be evaluated if the Sunat could be the centralizing entity of the collection and collection, as foreseen in the Law No. 29903 July 2012. For their part, the AFPs consider that it should be someone private.