They propose to create a trust of S/1 million for pension purposes for Peruvians at birth

Congresswoman Silvia Monteza Facho, from the Acción Popular bench, proposes creating the Mandatory Retirement Individual Trust (FIJO), for all newborn Peruvians. According to law, for the administration of a trust to be viable, the fund must be at least S/1 million, therefore the State would open a general trust with this amount, with individualized accounts for each newborn Peruvian.

For example, PL 4907 states that if a million Peruvians are born in one year, each one receives S/1 in their FIXED; if 500,000 are born in another year, each newborn will receive S/2 in their FIXED. It should be noted that births are decreasing every year, in 2021 there were 318,007, 57% less than in 2012 (738,945)according to the National Registry of Identification and Civil Status (Reniec).

The legislative initiative specifies that this contribution of around S/1 will be returned to the State when the minor receives the first private contribution or from his parents.: “If a child received S/1 in his FIXED at birth, and his mother transfers S/10 to him, the S/1 is returned to the State, and the newborn remains with S/10 in his FIXEDthe private deposit can be made at any time,” the document explains.

In order for each person to be able to access a pension of S/423.82 when they reach their retirement age, they must contribute S/1 daily from birth to 18 years of age, with which they will accumulate S/10,268 capitalizing at 5% per year, they would be able to have S/ 101,718 (see table).

The law also provides for the creation of a electronic wallet through which the contributions and the award of the trustee can be made, where companies can compete to have the trusteeship of all individual trusts. The companies that offer the lowest administration fee will win.

“A system of solidarity contributions is not viable, in that case, it is more viable for pensions to be projected individually as is done in the Private Pension System. The great problem of pensions in Peru, should not look for solutions on the side of contributions charged to wages, since the levels of informality would leave more than 70% of the population out,” is stated in the document.

The bill was presented on Thursday, May 4, 2023, and will have to go through the evaluation of the commissions of the Congress of the Republic before reaching the Plenary for debate and voting.