New AFP 2023 withdrawal: what do the MEF and the BCRP think about a new release of funds?

Six projects that request a seventh withdrawal of the individual funds of the AFPs are awaiting an opinion in the Economic Commission of Congress. The first legislative initiative that raises a disbursement of 4 UIT (S/19,800) was presented on February 8; however, to date, their debate has not been scheduled. In the last session of said working group, the president rosangella barbaran invited representatives of the Ministry of Economy and Finance (MEF), the Central Reserve Bank of Peru (BCRP) and other specialists, who left their comments on a possible approval of the release of the pension fund.

New AFP withdrawal: what does the MEF think?

According to the MEF, a seventh withdrawal would imply the departure of up to S/25,000 million, which could lead to an increase in poverty in the stage of old age, due to the informality of the labor market. Andrés Zacarías, head of the MEF’s Directorate of Financial Markets and Private Pensions, recalled that, from 2020 to 2022, six extraordinary withdrawals were approved, which meant the departure of S/87,937 million.

“The first two withdrawals, Although they were prompted by the Executive power, They were strictly measured with a focus on people with lower incomes, the most vulnerable population who were suddenly unemployed and (who), with the occurrence of the pandemic, could face situations of illiquidity in which we consider that if a withdrawal of funds was justified,” Indian.

New AFP withdrawal: what does the BCRP think?

In the words of Adrián Armas, central manager of Economic Studies of the Central Reserve Bank of Peru (BCRP), the approval of a new withdrawal would generate an impact on the country’s inflation rates. Likewise, he emphasized that, in recent months, the world registered the highest levels of inflation in the last 40 years, while Peru reports the highest rates in the last 26 years.

“Early withdrawals have eroded pension savings. Continuing to approve this type of measure makes us one of the countries with the greatest future vulnerability in terms of pensions”, the official pointed out.

The highest representative of the institution that regulates the currency and credit of the financial system, Julio Velarde, described as “madness” if some of the projects presented become viable. “It occurs to no one that they could be withdrawing money from the Pension funds. The population cannot be left without pensions. Taking all the money out is crazy, here or anywhere in the world. If you say to the worker: ‘Do you want to have the money in your hand or do you want it to go to a pension fund?’, he will answer: ‘I prefer to have the money in my hand, I prefer to spend it now'”, commented after a press conference on the inflation report for March 2023.

New AFP 2023 withdrawal: what steps are left to be approved?

AFP affiliates They should know that there is a regular procedure so that at least one of the projects presented in Congress has the green light. In this case, the six requests, which propose a withdrawal of funds, require, first of all, to be discussed and approved in the Economy Commission.

These initiatives should also be analyzed by the Work Commission, that it is in the power to make some adjustments to the legislative proposals. If at least one prospers in both ruling commissions, it will advance to the Plenary and it will be the congressmen who will decide through their vote if they authorize a new AFP withdrawal. If approved, it will go to Executive for their respective promulgation or observation, for which they have a period of 15 days.