Congress: Economy Commission prepares a reform aligned to the AFPs

The Economy Commission of the Congress of the Republic counts the hours to debate his proposal to reform the pension system, which would seek to prolong the current scheme of the AFPs, according to complaints from affiliate groups.

The reasons? The initiative, for example, determines that the ONP will turn to a public AFP model, in which individual capitalization accounts (CICA) will be established, abandoning its collective scheme.

Added to this is the penalty for a possible withdrawal of funds: the affiliate will lose the accumulated profitability —unless he uses that money to buy a home—; and, finally, those who enter the system for the first time must necessarily choose between one of the AFPs.

opposite realities

In three decades of the private regime, the discontent of citizens towards this model is unanimous: the AFPs never lost despite the fact that the profitability of the funds plummeted with the pandemic and they continued to be charged commissions for managing their contributions.

Only fund 0 —the most conservative of the AFPs— has grown substantially since last year, while fund 1 —where the risk is also low and there are those over 60 years of age— just left the negative tranche and slightly exceeds 4 % profitability, according to data as of April from the Superintendency of Banking, Insurance and AFP (SBS).

He background 2 —which concentrates 66.2% of all affiliates of the AFPs— continues with negative profitability and fund 3 accumulates a fall of almost 10%.

In the same period, the AFPs registered a gross income of more than S/390 million and, in terms of net profits, just over S/179 million, 19% more than in 2022 (more than S/150 million).

Overlapping interests?

The National Association of AFP Contributors and Exporters (Anaea-AFP) warned that the reform promoted by the Economy Commissionchaired by rosangella barbaran (Popular Force) responds to the interests of the AFPs, since the reform would penalize citizens who withdraw money from their funds by stripping them of their generated profitability.

In this line, the economist and professor at the Universidad del Pacífico, Noelia Bernal, recalled that the accounts are intangible and the money stored there belongs only to the member; therefore, the move would be unconstitutional and only creates more uncertainty for the already battered contributor because it is not known where his resources would go.

“Are they going to be distributed among everyone? Is the administrator going to keep them? What is going to happen? More than making a competition of opinions, we must calmly reflect and rethink this reform, ”he told La República.

More vices of unconstitutionality

Sigrid Bazán, head of the Labor Commission, pointed out that the Economy opinion requires new affiliates to join an AFP, and added to the fact that in the current regulations if a citizen does not decide to go to the ONP or an AFP, for default, they end up deriving it from the private model, only “the model that is already in place is deepened” with “S/150 pension less”.

In this regard, the constitutional lawyer Luciano López commented that the Magna Carta is violated not only because the individual accounts scheme ends the principles of solidarity for pensions, but also because citizens have the right to choose the system to manage their contributions for the retirement.

“Moreover, there is an old jurisprudence in the Constitutional Court, although with this TC it is no longer known, which recognizes free disaffiliation, even fulfilling a series of requirements to leave the private system,” he added.

Individual accounts for everyone?

The aforementioned initiative is also based on the fact that regardless of whether the system is public or private, the citizen will have an individual capitalization account renamed CICA, but with the same characteristics as the CICs managed by the AFPs.

In this regard, the economist explained that a proposal of this caliber demonstrates a high lack of knowledge of the matter, since there are studies that show that the individual account system, although it has its advantages, is not the best for all workers Peruvians who have low wages, do not have job stability, migrate from formal to informal employment, among other characteristics.

“Our national system is better for workers who earn between the minimum wage and up to S/2,000, because it guarantees you a minimum pension of S/500and that pension is higher than what you would get if you go to save at an AFP with the same salary, where you would get a maximum of S/250,” Bernal explained.

She added that she has observed that the forecast insists on using a few IGV points for pensions, when she herself warned in said working group, to which she was invited as an expert, that there is no country that has a social security design based on collection of said tax.

“Normally, those of us who consume the most are the ones with the highest income; therefore, we are the ones that pay the most IGV. In the end there would be more funds in my individual account, whereas the most vulnerable people, the poorest, do not consume in the same way, so they would benefit less”, stood out among the arguments against.

Barbaran admits fault

When asked about the complaints that link her to the AFP, Barbarán Reyes told The Republic They will make some changes to the forecast.

“It will be specified,” he acknowledged about the presumed mandatory link to an AFP for new contributors to his amending complementary provision, since “pension fund administrators are understood as the current AFPs and the ONP”; and regarding the loss of profitability after a withdrawal, he alleged that “they have raised it wrong”, since only State benefits would be removed, such as retirement incentives. “Profitability should by no means be lost,” he said.

César Abanto Revilla, a partner at Rodríguez Angobaldo Abogados, questioned that three projects are being prepared in Congress to reform the pension system, instead of sitting down to discuss to put together a single document, as happened with the Carmen Omonte commission a couple of years ago. years.

“There is even an ad hoc commission from Jorge Montoya and that is missing from the Executive Branch. It seemed more like a contest than something serious,” he asserted.

Barbarán blocks new AFP withdrawal

Yesterday, the president of the Economy Commission, Rosangella Barbarán, affirmed that she sent a letter to the Ministry of Economy and Finance (MEF) informing that there are a series of requests to authorize new AFP withdrawals, for which she asks this portfolio to notify What actions are you taking to give citizens more liquidity?

“The OECD’s chief economist, Pablo Antolin, has indicated that ‘the best way to help individuals who have lost purchasing power and their jobs It is through the State budget, not with pension savings’, For this reason, the MEF has been asked to report the actions it will take in the short term,” said Barbarán, ignoring legislators such as Bellido and Cortez, who asked him to schedule the aforementioned bills.

Pension reform without lobbies

Approach. Óscar Alarcón, president of Cenajupe

For us, the comprehensive reform of the pension system must start from the real concept of what the pensioner social securitywhich is contained in ILO Convention 102.

This is key, because from that agreement the minimum standards on this subject are indicated. We consider that the contribution cannot be only from one of the parties, in this case, only from the worker, who is discounted 13% of your salary. It must be the competition of the three members of the social dialogue: workers, employers and the State.

In addition, we have made public our difference and our criticism regarding the fact that there is a very active lobby that is relying on the congressional majority to favor the AFPs and weaken the National Pension System. We need a reform without lobbies that strengthens pension social security, based on the principles of solidarity, integrity, universality and sustainability.

They propose a stop to withdrawals

The forecast indicates that affiliates who choose to withdraw their funds will lose their benefits, which are the returns generated by their retirement contributions.

reactions

Rosangella Barbarán, president of the Economy Commission

“Regarding early retirement, what is lost is the benefit of the State covering you. Its profitability should in no way be lost (…) They have raised it wrong. We are adjusting several points”.

Noelia Bernal, economist

“(Unlike the ONP), in the AFPs you won’t even dream of getting a pension of S/250 with a 10-year contribution. And less in a current context, where low rates of return are expected in the coming decades.

figures

• S/390 million is what the AFPs received for the collection of commissions until April 2023.
• Only 2 out of 10 workers contribute to a pension system, recalled César Abanto Revilla.