A couple of days ago, the Economy Commission of Congress approved its proposal to reform the pension system, which ends with the ONP and prioritizes the creation of individual savings accounts, Therefore, only the AFP scheme will exist, if this initiative materializes.
From the office of Rosangella Barbarán (Popular Force), president of the mentioned group, they recognize that workers will continue to be solely responsible for the money they contribute for their old age, since a monthly rate of 10% is set —plus another percentage for administrative costs — which will be deducted from income. Otherwise, if the duty is shared with employers, informality would be encouraged.
last in line
The closest experience of pension management can be seen in Chile, from which the AFP system was modeled at the beginning of the 1990s. Previously, Peruvian employers contributed 6% and workers 3% for pensions; but, with the arrival of the AFPs, the burden was placed solely on labor.
In this way, currently, workers contribute around 13% of their salaries without any support from companies. Of the total contribution to pensions, a significant part corresponds to the administration commissions charged by the AFPs.
According to various specialists, if we look at our neighbors Colombia and Chile —where the priority role of the AFPs was maintained until recently— we realize that we are falling behind, since these countries are directing their reform towards a mixed and multipillar scheme , since the State guarantees a minimum pension for everyone and prioritizes those who have less.
The Economy Commission approved a reform in the pension system on June 9. Photo: diffusion
The labor activist Javier Mujica recalls that Barbarán Reyes’s initiative violates agreement 102 that Peru has signed with the International Labor Organization (ILO), in which they recommend that the pension scheme must rely on three pillars: non-contributory basic universal pension , a contributory one based on employers’ contributions and a voluntary one —here public or private— for those who make the most profit.
“This reform destroys social security and deepens a path that others abandoned: that of individual contributions. That of financing pensions with the IGV is for those who have the most, ”he commented for La República.
Interests of the AFPs accommodate the opinion
Within the opinions received in the document supported by Barbarán Reyes, the AFP Association considers most of the bills included in it “valuable”, alleging that the inclusion of independent and informal workers, as well as respect for the intangibility and members’ freedom to choose their system, is correct in the reform.
What else do the AFPs agree with the Economy Commission? The pension administrators assure that a possible withdrawal of funds, consigned in the opinion, over-indebts the affiliates and is harmful for their retirement, since their source of savings is cut off. A similar script has Barbarán, who, despite the projects crowded in his group to authorize the release of funds, says that the priority is the reform of the absolute model and not the release, which would be debated once the opinion prospers in the Full.
Weeks before, Jorge Montoya —who heads the ad hoc commission of Parliament to reform the pension system— questioned the speed with which the Economy Commission wanted to approve its opinion; but, a couple of days ago, he backed the proposal without qualms. In addition, of the 14 votes in favor, the majority came from Fuerza Popular and Acción Popular congressmen.
Two sessions were enough for the text to see the green light and, hours before it happened, La República consulted Barbarán Reyes on some points that demonstrated the fixation of the reform to the AFP model: affiliates were necessarily going to have to choose a private administrator and their profitability would be taken away if they release their funds for purposes other than home purchase.
Rosangella Barbarán chairs the Economy Commission. Photo: diffusion
Barbarán acknowledged that “they have made mistakes” and annulled these criteria from his text, but, from his office, they confirmed to this newspaper that they are still directing the final opinion, since their debate demanded it.
“Regarding early retirement, what is lost is the benefit of the State covering you. Its profitability should in no way be lost (…). They have put it wrong. We are adjusting several points”, commented Barbarán for this newspaper.
Is informality really encouraged?
The labor activist Fernando Cuadros Luque agrees that the ILO agreement must be respected and, therefore, the reform must be directed towards a gradual and progressive contribution between the State, workers and employers.
“The logic that labor rights generate informality goes back decades. Special regimes have been created and their creation did not imply a massive formalization of workers because labor rights were reduced. High levels of informality have been maintained in microenterprises and where informality fell was in those where the general labor regime is in place. This logic responds more to something ideological ”, he commented.
In his opinion, regulatory changes should not be imposed abruptly, but should be carried out progressively, prioritizing micro and small companies, which are the ones with the greatest presence in the market.
At this point, Mujica proposes that they adapt to mypes and establish, for example, an aid system to finance the contributions of this segment, but “really direct them” to those who need them, because during the pandemic state subsidies were unjustifiably given to the largest companies.
“The large agribusiness firms, for more than 20 years, were allowed to pay less, half the Income tax to the detriment of its workers, contributing 4% for social security when the rest contributed 9%,” he added.
And regarding the questions about the administrative role of the State, he assures that this will continue to be frowned upon if corruption is not uprooted, but it is not the ideal criterion to leave the way for the AFPs, since in 30 years the results have been clear and are reflected in the discontent of the citizenry.
“Consensus must prevail, it is not a competition”
Lawyer César Abanto Revilla questions the fact that Congress is drawing up a reform subject to diametrically opposed criteria, instead of betting on collective work in which there is consensus, without the need to impose a text alien to the technical criteria that a pension reform demands it.
On the other hand, sources close to the Ministry of Economy told this newspaper that the Executive Branch’s proposal to reform the system would be presented “this week” —in reference to the one that ended— but, so far, there are no work lights of its commission, which, as a rule, was valid until May 31 of this year.
Minister Alex Contreras announced that his proposal would bet on including more entities in the administration of funds, since this would encourage better competition.
The numbers
- 3% contributed by the workers. With the income of the AFPthe rate rose to more than 10%.
- 9 million affiliates have the AFPs. They only receive a pension just over 70,000.
The AFPs welcome Barbarán’s text
The entire weight of the reform proposed by the Economy Commission falls on the workers. The AFPs salute you.
Source: Larepublica
Alia is a professional author and journalist, working at 247 news agency. She writes on various topics from economy news to general interest pieces, providing readers with relevant and informative content. With years of experience, she brings a unique perspective and in-depth analysis to her work.
