Minimum pension would benefit those who earn the most

Although the draft to reform the Executive’s pension system was prepared by various actors such as the Central Reserve Bank (BCRP) and the Superintendence of Banking and Insurance (SBS), it is already receiving severe criticism, since it would not propose substantial changes.

for the economist javier oliverathe document does not contemplate a comprehensive system and the cost of allowing the transition from one system to another —which has been highlighted by the Ministry of Economy and Finance (MEF) as an advantage— can be very high considering that there will be minimum pensions without solidarity financing.

“It is the State that will provide the supplements for these pensionswhich will be claimed above all by the 20% of medium and upper-middle income workers in Peru who can save in a pension system, which would be regressive,” he warned.

Regarding the non-contributory pillar, he questions that it is not universal, but that it is only focused on people living in poverty, which today is covered by the Pension 65 program. “The best thing that could be done is to have a universal social pension financed with 1 % extra from IGV and another 0.5% taken from what goes to local governments and other sources,” he said.

For her part, the president of the Legislative Work Commission, Sigrid Bazán (Democratic Change), expressed his concern about the proposal because in his eyes it is not entirely clear and “drags” many of the errors that already exist today.

One of these errors is the revision of the amount for the minimum pension every three years, which would only increase if the Executive so decides. “This is not only unfair, and it does not constitute an improvement, but it also contradicts a ruling of the Constitutional Court (TC), which says that the Executive and the Legislature have to promote the progressive increase of the minimum pension”, he highlighted.

Although the deadlines have not been reported, the Government indicated that the document has been made public to receive comments for its final version. The approval will be subject to Minister council.

For now, in Congress there are two opinions that propose a reform, from the Labor and Economy Commission. At the close of this note, despite the fact that rosangella barbaranpresident of the last group in question, tried to have only her opinion voted on, Acción Popular and the Bloque Magisterial withdrew their support and it will not be debated in this legislature, which ends today.

Aspec Warns Vices

The Peruvian Association of Consumers and Users (Aspec) reiterated that the opinion of the Economic Commission contains statements that are detrimental to members of the ONP and AFP.

For this reason, they suggest that the Investment Committees of the AFPs have the participation of a representative of the workers to eliminate the risk that the administrators make risky investments with the funds.

They also point out that the legal reserve account must be made available to replace losses due to “bad investments.” Finally, they demand that it be specified whether free disaffiliation from the private system is possible, as well as the withdrawal of 95.5% of the funds for the Early Retirement Regime due to Unemployment.

The word

Javier Olivera, Economist

“The MEF and Congress must be serious and present their simulations of the fiscal costs of the reform. No reform can be decided if the costs and who will pay for it are not well evaluated”.