One of the most relevant aspects when we start working life is deciding the entity that will administer our pensions. Workers who enter a new workplace and are not affiliated to any social security system have the option of joining both the Private Pension System (SPP), through one of the four AFPs (Habitat, Integra, Prima, Profuturo) that exist in the country, or by National Pension System (SNP), administered by the ONP.
However, some do not know how this procedure is carried out and what are the obligations of an employer on the subject when hiring a new employee. In addition, the question arises about what happens if one of the given options is not chosen.
What is the procedure to join a pension system?
In the first place, workers who enter a new workplace must tell their employer which pension system they belong to, whether it is private or public. If you are part of the SPP, you must inform which AFP you are affiliated with.
In the event that the person is not yet registered in any of these, they must choose the option you prefer (AFP or ONP) and communicate it to your employer.
“When a worker signs a formal contract, he has a period of 10 days to choose if he wants to belong to the AFP; that is, saving in an individual account in the Private Pension System or choosing to be in the ONP, which is the SNP”, explained Noelia Bernal, professor of Economics at the Universidad del Pacífico.
In that line, according to Superintendency of Banking, Insurance and AFPs (SBS)employers are responsible for taking the following steps if they hire a worker who is not yet affiliated with any of the pension systems:
- Give the employee an information bulletin.
- Ask you to choose whether you want to be in the SPP or in the SNP, so you must fill out the Election Form of the Pension System.
- Subsequently, you must register the worker’s choice in the T-Registry, which is Sunat’s digital platform that contains the labor information of employers, workers, pensioners, personnel in training, interns, service providers, third-party personnel and beneficiaries. .
- Finally, the AFP will send your employer the list of affiliated workers, with which you are authorized to pay your contributions in AFPnet.
What happens if the worker does not choose any pension system?
However, there are also cases in which the person is insecure and does not know what the best option is, so they do not inform which system they want to belong to. In these circumstances, the employee is not left without affiliation, but rather is enrolled in the Private Pension System, that is, in an AFP.
“If the worker does not express a choice, the regulation provides that they be registered in an AFP (Private Pension System). That is what is called in economics ‘the default option’ (default option), because the regulation has to provide for the worker to save somewhere,” Bernal said.
In this line, the portal of the SBS indicates that the employee who did not express his choice automatically will be registered with the AFP that wins the tender; that is, the one that offers the lowest commission for managing your funds. Currently, AFP Integra is the administrator that by default is in charge of the funds of all new workers who join an AFP.
To explain the reasons for this regulation, the economist He pointed out that previously it was believed that the individual accounts (AFP) were a superior mechanism to the distribution system (SNP).
“Today, that is no longer believed so much; not because the AFPs are not good, but because much more is known now —than 20 or 30 years ago— about the Private Pension System (SPP); like that the level of commissions is still extremely high, that there are periods of financial crisis that greatly affect savings, that people do not save 100% of the time. It cannot simply be said that the private system is better than the (public) distribution system: there are advantages and disadvantages in each of these institutions (AFP and ONP)”, highlighted Noelia Bernal.