3.1 million affiliates who went from the ONP to the AFPs will receive a recognition bonus

More than 3.1 million members of the National Pension System (SNP) that decided to switch from 2002 to 2021 to the Private Pension System (SPP) -made up of the AFPs- will receive the recognition bonus, that is, they will be recognized for the contributions they made during their stay in the ONP.

This, after the Congress of the Republic insistently approved the update of the recognition bonus for contributors and exporters of the Pension Standardization Office (ONP). Previously, the cutoff for these bonds was in 1992, 1996 and 2001.

The former Minister of Economy Luis Miguel Castile points out that although this initiative reaches, in principle, a total of 3.1 million affiliates who have already migrated to the AFPs, In the short term, it will only benefit some 50,000 contributors who are close to retirement.

“The recognition bond does not represent an immediate transfer of resources to the holders of these bonds, rather it is a promise that would only become effective at the age of the pension, at 65 years of age. That is, of those who have already transferred, those who would have some benefit are just over 50,000 affiliates,” Castilla told La República.

The economist and also executive director of the Videnza Institute stated that the Executive will most likely question the rule before the Constitutional Court, since this law implies a total fiscal cost for the State that exceeds S/40,000 million.

Strong transfer to the AFP

The measure, which will be promulgated in the coming days, not only covers those who have migrated to the ONP date to an AFP, but also It will also benefit those affiliates who decide in the future to switch to the SPP.

In this sense, the Ministry of Economy and Finance (MEF) estimates that there are 1.96 million ONP contributors who would transfer to an AFP by having this recognition bonus.

To this group would be added the 2.7 million affiliates who no longer make contributions to the National Pension System and, therefore, would find it more convenient to migrate to an AFP.

According to the MEF, the greatest incentive there would be is that in the ONP it is required to meet the requirement of years of contributions to access a pension, while in the SPP affiliates who have few contributions, although they cannot finance a pension, they have the option of withdrawing their accumulated fund, “consequently they will be attracted by this possibility and in turn have EsSalud coverage.”

In this way, a total of 4.6 million affiliates who are in the public pension system could go to the private one, putting the ONP’s sustainability at serious risk, warns the head of said entity, Victor Hugo Montoya.

“The approval of this new recognition bond will aggravate this financial imbalance because it is estimated that around 4.6 million affiliates could stop contributing to the National Pension System,” said the official, adding that it also impacts the financing of the payment of pensions, because the contributions of the affiliates are destined to the payment of said payroll.

BCRP: National Pension System would decompensate

The Central Reserve Bank of Peru (BCRP) warned that this measure puts the ONP at risk, in a context where the pension reform is being discussed.

“On the one hand, it unbalances the National Pension System, where contributors finance the payment of pensions for current pensioners. For example, last year the fiscal cost of transfers that the Treasury has to make was 1,300 million and that could generate greater pressure on the side of the public budget,” he told the press carlos montoromanager of Monetary Policy of the BCRP.

The official noted that this rule promoted by Parliament “affects the balance and jeopardizes decent pensions in old age”.