AFP: more than 10,000 retirees receive less than S/500

More than 10,000 retirees from the Pension Fund Administrators (AFP) receive less than S/500 as a pension. Even within this group, around 2,000 pensioners earn less than S/100, according to data from the Superintendency of Banking, Insurance and AFP (SBS).

In addition, Some 12,000 retirees have a pension of between S/500 and S/600. These reduced amounts are due to the low number of contributions to the Private Pension System (SPP).

The AFP model

Why do some affiliates receive low pensions in the SPP? As it is a system of individual capitalization accounts (CIC) —the scheme that is sought to be replicated for the ONP in the opinion of the Economic Commission—, the pension depends on the accumulated fund saved by the affiliate during his work stage.

For example, if a person has a low income and makes few contributions, their pension fund would be low and, therefore, their pension amount would be less.

The Government has been seeking to reform the pension system for some time. Photo: diffusion

“If you have had a salary for 25 years above S/3,000, you will have 40% of your pension when you retire, but not everyone has the privilege of earning that amount. So, there are Peruvians who earn S/1,250 and they discount the AFP. The fund is according to what you have contributed and there are pensions of S/100 or S/200. It’s incredible,” laments Ítalo Lezcano, president of the Association of AFP Exporters, who adds that there is currently no minimum pension in the private pension system.

It is important to mention that just over 4,000 retirees receive S/2,000 as a pension, as a result of having a high accumulated pension fund.

Pensions in the ONP

Otherwise, it happens in the National Pension System (SNP), administered by the Office of Social Security Standardization (ONP), since the minimum pension is S/500 as long as the member of this scheme has contributed for 20 years.

For the economist and professor at the Universidad del Pacífico Noelia Bernal, the national scheme is beneficial for low-income Peruvians, since they would have a guaranteed pension in the future.

“The individual account system, which although it has certain advantages, is not the best for all workers. It is good for those who have good wages, contribute a good percentage of their working life, contribute frequently and have a stable job. It is not for very low-income workers,” affirms the expert.

According to Noelia Bernal’s calculations, if an AFP member who receives a minimum wage contributes for 20 years, they would have a pension of between S/200 and S/250, while if they had belonged to the ONP, they would be guaranteed S/ 500, that is, almost double.

Even, under the SNP you can opt for a proportional pension of S/350 (with at least 15 years of contributions) or S/250 (contributing at least 10 years).

“In the AFP, you won’t even dream of getting a pension of S/250 with a 10-year contribution. And less than in a current context, where rates of low profitability in the coming decades”, says the professor.

Added to it, there is also the benefit of pension loanswhich is granted to the member who does not meet any of the prerequisites to be able to access a pension.

Affiliates in investment funds

For the president of the exporters of the AFPs, Italo Lezcanomember representatives should be included in the AFP investment funds to protect pension savings.

In addition, also criticizes the work of the AFPs regarding expanding pension coverage In our country.

“The AFPs have always dedicated themselves to discounting the formal worker. Every month they receive from that 30% that are the people who are on the payroll, they have never bothered during the last 30 years to raise awareness of social security to the carpenter, gardener, bus collector, taxi driver. You have to create financial products to pull those people in,” he says.

The word

Italo Lezcano, President of the Association of Exporters to the AFPs

“If you have had a salary for 25 years above S/3,000, you will have 40% of your pension when you retire, but not all people have the privilege of earning that amount.”

Pensions in Peru

Infographic – The Republic