SNP: individual accounts in the ONP will not help everyone

One more proposal on the agenda. The Economy Commission of the Congress of the Republic will debate today its proposal to reform the pension system, which —in essence— takes the scheme of individual accounts —which govern the AFPs— to the National Pension System (SNP)led by the ONP.

Rosangella Barbarán (Popular Force), president of the group in question, maintains that her proposal —which includes more than a dozen bills— diversifies the pension market, since the ONP and the companies of the financial system will be able to compete with the AFPs to manage the funds.

Limited scope?

The economist and professor at the Universidad del Pacífico, Noelia Bernal, questions whether the individual AFP accounts are maintained in the new system, since a mistake is being made if one believes that, regardless of salary, pensions will improve for everyone. Added to this, low rates of return are expected for the coming decades.

“There is a lot of ignorance. The individual account system, although it has certain advantages, is only good for those who have high salaries, make frequent contributions and have a stable job. It is not good for those with very low incomes,” says the teacher to The Republic.

Those who receive between the minimum and S/2,000 are guaranteed a pension of S/500 with 20 years of contributions to the ONP, an amount “much higher” than what they would receive upon retirement in the individual scheme of the AFPs, in which ” they would barely get a pension of S/200 or S/250,” according to Bernal. Even if he contributes only 10 years, he manages to obtain a proportional pension of S/250.

They insist on the IGV

ESAN finance professor Jorge Guillén is in favor of establishing “a kind of state AFP”, since the burdens on contributors would be alleviated — that is, the collection of commissions because “it would not have the objective of maximizing benefits at the expense of the affiliate “—— In addition, he considers it crucial that citizens with lower incomes are not left to fend for themselves.

The expert agrees with Bernal on the disproportionality of the individual account system and recommends that the commission led by Barbarán be transparent with the migration of the ONP to this model of the AFPs, since within the public ideology it is believed that state entities are not trained to manage resources, especially when these come from several years of effort.

“The individual capitalization of funds benefits those who earn more. What will happen to the solidarity pillar of the ONP? Seed capital must be established and the state intervenesGuillen says.

In addition, it criticizes the commitment to allocate part of the IGV – 3% that would be installed progressively, according to the forecast – due to the fact that people with greater purchasing power will once again be welcomed, while the great mass in remote places in rural areas or In the urban periphery, he usually buys in small markets where the IGV is not applied, unlike the large market chains.

Irregularities in the predictamen were corrected

At the close of this edition, the Economy Commission sent the new forecast, in which some points that tipped the balance towards the AFPs were modified, as La República warned. For example, affiliates of the pension system will no longer have to choose an AFP, but now they have at their disposal both private ones and a financial or public company.

In addition, the accumulated profitability will no longer be removed from users who release their funds in the event of a possible regulatory authorization. However, they maintain the rate of 10% for the contributions of the workers “plus another that is collected” in the system.

The word

Noelia Bernal, economist

“We have to combine both individual accounts with a distribution system, a collective system. We have to create a mixed and more robust system that protects everyonenot just one group.”