Recognition bonus will be transferred from April 2024

After being approved by insistence two weeks ago in plenary session, the Congress of the Republic published Law No. 31729 yesterday to update the recognition bond after 20 years. Former members of National Pension System (SNP) that moved to the Private Pension System (SPP) since 2002 will now be able to request the transfer of their contributed money once they reach retirement age: 65 years. This rule will also benefit those who decide to migrate to the AFPs in the future.

Still no regulation

Although the law is already in force, the conditions are still unknown. The Ministry of Economy and Finance (MEF) has a maximum period of 12 months to issue the requirements and regulations for the transfer of contributions, while the Superintendency of Banking, Insurance and AFP (SBS) must establish the procedures and guidance for users. Thus, from April 2024 the transfers would begin to be made.

As a complementary provision, it was also specified that the Pension Standardization Office (ONP) will issue a letter every six months with the list of contributors who are entitled to the recognition bonus. From the ONP They clarified to La República that they will not receive the requests directly, but that these must be made through the AFPs. In addition, the amount to be received must be deposited in the individual capitalization accounts (CIC).

Bonus is a book balance

What was contributed to the ONP before migrating to the AFP will only be available when the retirement age is reached. “It’s like an accounting balance, a recognition. Nor will it generate interest over time, something that is often criticized for these measures,” ESAN associate professor Jorge Guillen pointed out to this newspaper. He also recalled that citizens will be able to view it on their account statements, but It will only be transferred at the end of retirement “when the State pays it as a debt to the AFP.”

How much would you receive on average?

According to the ONP, affiliates who request the new recognition bonus will receive an average of S/3,600. On the other hand, the tax expenditure of the law will be S/40,000 million, and for the first year of application it would cost S/5,000 million. This would be, according to the public pension agency, a budget that has not been contemplated and that could put its existence at risk. The ONP calculates that around 4.6 million affiliates would migrate to the AFPs after the new regulations, which would jeopardize the monthly payment schemes of more than half a million retirees belonging to the national system.

Accounts will start at zero

It is worth emphasizing that by moving now to the AFP, Affiliates will start without any sol in their individual accounts, a situation that would affect those over 50 since they would just begin to cement their pension in the private system —warns the ONP— by having less time to save for their retirement.

MEF considers it “highly probable” to file a lawsuit before the TC

Alex Contreras, head of the MEF, announced that they are considering going to the TC. “It is highly probable taking into account that we have observed the law and that it has been approved at the insistence. With high probability we are going to file a claim of unconstitutionality,” he said. If the TC agrees with the Executive, the entry into force of the law will not be avoided until a sentence is received, the constitutionalist Luciano López told La República. In addition, if there is a favorable ruling for the Executive, it would not imply returning the deposits. “You cannot ask them to return (the money). Conceptually, a judgment of unconstitutionality it does not disrupt what was already done during the validity of the law,” he explained.