Reform to the pension system reaches the Plenary without consensus

The Congress of the Republic has two proposals (see infographic) to reform the Peruvian pension system, whose contents are far from each other in substance and form. Specialists agree that the ideal would have been to work on a single initiative, as was the case of the Special Multiparty Commission led by Carmen Omonte; but what is concrete today is that both are already ready to be debated in the Full. There is no way back.

“The high labor informality in Peru, the second highest in South America and higher than countries with similar levels of GDP per capita, and associated with low levels of productivity and income, is one of the main problems of the Peruvian Pension System (SPP)”, says the report of the Multisectoral Commission led by the Ministry of Economy and Finance (MEF) with the same objective as the Legislative working groups, whose final proposal has not yet been delivered despite the fact that the deadline expired at the end of May.

In race

The Economy and Labor Committee, chaired by rosangella barbaran (Popular Force) and Sigrid Bazán (Democratic Change), respectively, have managed to approve two opinions with the aim of reforming the SPP. According to entities such as the International Monetary Fund (IMF), this is based on an ineffective model: it does not cover the majority of the population, having only 25% of the labor force contributing towards their retirement.

Bazán’s opinion, although in a minority, was approved first and the novelty it brings is that the worker’s contribution drops by 4% and proposes a universal system of three pillars. The first is non-contributory, which seeks to guarantee a basic pension to all financed by the State, which includes Pensión 65 and Contigo.

The contributory one follows, in which the State would be the manager of the funds and at the same time would contribute with 1%, the worker with 9% —today it is 13%— and the employer with 4%. The independent They are also considered here and contribute 5% of their income, and the beneficiary of the service contributes 5%, while the self-employed without continuity of services will be co-financed by the State.

And in the third pillar, the complementarythe affiliate may choose between the public and private system as long as his remuneration is greater than the equivalent of five minimum vital remunerations (RMV), that is, S/5,125.

On the other hand, the initiative of barbaran it seeks that all those over 18 years of age have an individual capitalization account, either in an AFP or in the ONP. In addition, for each consumption, 3% of the IGV would be allocated to the individual pension fund, with a maximum limit, in such a way that the excess of the value of a basic basket (S / 430) in the month will go to the Solidarity Pension Fund (Fonsol). This fund has the objective of covering affiliates who did not reach a minimum pension with their contributions.

Self-employed workers must also make a mandatory contribution: 6% if they have income of less than 1 UIT (S/4,950) and 13% when they exceed that amount.
Experts in the field, such as the economist Javier Olivera, point out that it is not a good indicator for the reform that there are three proposals walking independently.

“It is unfortunate that there are three groups to reform the system when there should be a commission that works with the Executive at the same time,” he said.

Pressure to debate a single opinion

At midnight last Friday, the opinion of the Economic Commission to reform the pension system entered the Plenary’s agenda, exonerating it from the opinion of the Working group.

This decision had the support of the benches of Popular Action, Alliance for Progress, Magisterial Block of National Agreement, Popular Renewal, Avanza País and Somos Perú.

The National Central Union of Retirees and Pensioners of Peru (cenajupe) sent a letter to Rosangella Barbarán asking her to justify her proposal, which in practice puts an end to the public pension system.

Cenajupe also expressed his support for the Labor initiative, which, although it is perfectible, is designed on the basis of the principles of universality, solidarity, sustainability and participation, they maintain.

Data

AFP. There are 200,000 pensioners; what they receive is determined by the CIC balance and modality.

ONP. There are 641,000 pensioners. The minimum pension is S/500 and the maximum is S/893. The amount depends on the years of contribution.