Increase in the pension for retirees: since when would it be effective and what is missing before it is enacted?

The announcement by the president, Dina Boluarte, and the Minister of Economy, Alex Contreras, regarding the increase in the minimum pension, from S/500 to S/600, has generated expectations among retirees from the Pension Standardization Office (ONP). . Since 2019, this amount has not been readjusted and many wonder about the procedure to make this measure operational and from what date it could be made effective. In this note, we talked to two specialists about it.

Executive announces increase in ONP pensions: what are the prospects?

For the former Minister of Economy Pedro Francke, this increase is little in relation to the affectation suffered by pensioners and the population due to the rise in prices of the basic family basket and inflation. However, he indicated that the approval of the pension system reform law should not be expected to readjust this amount.

“It seems to me that it is little in relation to the rise in prices and inflation. It is a minimum, and what we need is a pension system that is fairer for the majority, and that requires a reform of the pension system. Inflation has eaten up the real value of pensions in recent years, and it should be readjusted, not wait for the approval of the pension system reform law”explained to The Republic.

For his part, ESAN’s finance professor, Jorge Guillén, said that the eventual adjustment is innocuous, because with an increase of S/100 soles the basic consumer basket cannot be covered, in the face of inflation and the deterioration of purchasing power. .

“It is an innocuous measure that is not bad because it tries to somewhat alleviate the deterioration of the purchasing power of this age group. However, the consumption basket has deteriorated by more than 30% after the pandemic and with S/100 it is not enough to cover it”held.

Increase in ONP pensions: since when would it be implemented?

According to statements by Minister Alex Contreras, the proposal to increase the minimum pension for retirees under Legislative Decree 19990 would be presented to Congress in September, as an integral part of the pension system reform project.

“The increase in pensions requires a law, I am sure that we will achieve the possibility of consensus in Congress. We will send the bill at the latest at the end of September so that it can be increased in 2024,” he explained.

In this regard, former Minister Francke considered that a measure like this should be independent and in advance of the reform of the pension system. “If it is made to depend on the approval of the pension system reform as a whole, I don’t think it is very convenient. A measure like that should be independent and a pension model must have a readjustment system”he stated.

Let us remember that the Executive’s proposal, prepared and agreed upon by the members of the Multisectoral Commission, will have to be presented in September before Congress for processing in the Official Office, referral to ordinary commissions, such as Economy or Labor, preparation of opinions and final approval. in the respective working group, which will elevate it to higher levels, such as the Board of Directors and the Plenary of Congress.

Once it is approved in commissions and the Plenary of Congress addresses it for its final legislation, the autograph must be sent to the Executive Power for its subsequent promulgation and publication in the El Peruano newspaper.

When was the last time the ONP retiree pension was increased?

On May 1, 2019, the Council of Ministers of the Martín Vizcarra government approved the increase in pensions for retirees under Decree Law 19990, which went from S/415 to S/500, and became effective the following day with the publication of the standard in the Official Gazette El Peruano. In this regard, the last adjustment of pensions to this regime had occurred 22 years ago, in 2001.