AFP Withdrawal 2023: what does the SBS think about a new disbursement of funds?

There are six bills that seek to authorize a seventh release of individual funds from the Pension Fund Administrators (AFP). Are proposalswhich are awaiting an opinion in the Economy Commissionhave caused diverse opinions and positions on various fronts such as the Ministry of Economy and Finance (MEF), the Central Reserve Bank of Peru (BCRP), the AFP Association and the Superintendence of Banking, Insurance and AFP (SBS).

What does the SBS think about a new AFP withdrawal?

Two of the most famous legislative initiatives are those that propose the withdrawal of 3 UIT (S/14,850) and 4 UIT (S/19,800). Precisely, on these, the SBS provided an opinion report, at the request of the aforementioned working group chaired by the Fujimorista rosangella barbaran. In its official letter, the entity indicated that a new premature withdrawal of pension funds deteriorates pension coverage throughout the country because it leaves more people without sufficient resources for their old age.

In its report, the SBS shows statistics as of December 2022 as a result of the promulgation of regulations that allowed extraordinary withdrawals in the Private Pension System. These data show that more than six million affiliates withdrew their funds, the disbursement of which represented the sum of S/87,000 million, that is, 15.6% of the Gross Domestic Product (GDP) in 2022. Below, we show the detail of the number of affiliates who disposed of their money according to the regulations that authorized AFP withdrawals.

SBS: “The beneficiaries will be those with high savings”

Based on his analysis, the authorization of a new withdrawal of up to 4 UIT would generate a potential outflow of retirement resources that would amount to a total of S/24,000 million (23% of the total pension fund), in addition to those already withdrawn by the rules that allowed extraordinary withdrawals of funds between 2020 and 2022.

In addition, the SBS warns that the most benefited will be those with high savings, because Few people have more than 1 UIT (S/4,950) in their funds. Around 4.6 million affiliates will only be able to access up to 1 UIT from their individual capitalization account and at the same time, 63% of the funds would be withdrawn by affiliates with high savings.

“The pension funds have been created with the objective of providing retirement, disability or survivorship pensions, as a means of protection against the risks of old age, disability and death, respectively, and not to provide coverage against other types of risk “, they point out by way of argument.

New AFP withdrawal: how many affiliates would have their funds?

As mentioned by the SBS, if either of the two proposals is approved (withdrawal of 3 UIT and 4 UIT), a potential outflow of funds is estimated to range from S/22,000 million to S/25,000 million and that around six million members of the Private Pension System would choose to make these withdrawals.

“harmful measure”

To the description of “madness” coined by Julio Velarde regarding an eventual seventh withdrawal from the pension fund, “a harmful measure” is now added, in the words of the SBS regarding these proposals for new disbursements. They add that heearly withdrawals of the pension fund “the retirement savings have decreased and, consequently, the levels of future pensions”.

Finally, they state that early withdrawals will have an impact on the economy and the future of the country, since it will generate a greater financial burden on society, it will considerably affect health care, the capital market, it will worsen the country risk rating and it will fail to comply with the good practices recommended by the Organization for Economic Cooperation and Development (OECD). .