Withdrawal of AFP 2023: what are the 11 bills for the release of funds about?

The withdrawal of funds from the Pension Fund Administrators (AFP) continues to be a subject pending debate in Congress. As of the beginning of the 2023-2024 legislature, the Economic Commission, chaired by parliamentarian César Revilla, has on the agenda a list of 11 bills related to this issue, which could not be ruled on in the previous period. In the following note we will tell you what these legislative initiatives are about and what were the opinions of the head of this working group and the Minister of Economy and Finance in this regard. Pay attention!

Withdrawal of AFP 2023: what bills are pending debate?

More than seven months ago, Congresswoman Digna Calle presented the first bill so that AFP affiliates can request the withdrawal of up to S/19,800 (4 UIT) from their retirement accounts. After that, 10 more legislative initiatives have been presented, but none of them were debated in the Commission on the Economy, Banking, Finance and Financial Intelligence of the Legislative Branch during the administration of parliamentarian Rosangella Barbarán.

Most of these legislative proposals seek the release of 5 UIT, 4 UIT, 3 UIT, 50% and 70% of the individual capitalization accounts (CIC) of the AFPs, so that citizens face the rise in prices of the basic family basket as a result of the economic recession and inflation that the country is going through.

The last of them was bill 5761/2023, by congressman José Luna, who proposes optionally authorizing a seventh withdrawal of funds of up to 4 UIT and transferring 100% to pension accounts within the financial system, which sets it apart of the other proposals presented by the other parliamentarians.

Finally, the other remaining proposals seek to increase the withdrawal amount to buy a property or pay debts through the mortgage guarantee. Below, we detail all the legislative initiatives that have been presented to date:

• AFP withdrawal of up to 4 UIT (S/19,800) – Digna Calle (Podemos Peru)
• AFP withdrawal of up to 3 UIT (S/14,850) – Víctor Cutipa (Perú Bicentenario)
• AFP withdrawal of 50% of funds – Elías Ávalos (Podemos Peru)
• AFP withdrawal of 70% of funds – Américo Gonza (Perú Libre)
• AFP withdrawal of 50% of funds for home purchase – Patricia Juárez (Popular Force)
• AFP withdrawal of 3 UIT (S/14,850) – Víctor Flores (Popular Force)
• AFP withdrawal of 5 UIT (S/24,750) – Jaime Quito
• AFP withdrawal of 4 UIT (S/19,800) – Guido Bellido (Peru Bicentennial)
• 25% AFP withdrawal to pay mortgage-backed debts – Melissa Córdova (Avanza País)
• 100% AFP withdrawal for home purchase – Ilich López (Popular Action).
• AFP withdrawal of 4 UIT (S/19,800) – José Luna (Podemos Peru)

AFP Retirement 2023: what do the congressmen say?

César Revilla, the new president of the Congressional Economic Commission, told La República that during his tenure the 11 proposals to withdraw funds from the AFPs “in a technical way” will be debated.

“It is not that they are going to debate crazy or due to pressure. The actors involved will be invited and the real repercussion of each of these (proposals) will be seen. It is necessary to evaluate who is going to benefit and how many people in a state of vulnerability the norm is going to help. The opinion of the affiliates will be included in the debate. We are going to determine with them the real numbers of beneficiaries and how many have 4 UIT in their accounts to withdraw ”, he explained.

For his part, parliamentarian Jaime Quito said in statements to this medium that projects to withdraw funds from the AFPs should be treated as a priority, but within the framework of the debate on the comprehensive reform of the pension system. Similarly, he recalled that there is a minority opinion on this issue that proposes a universal pension model.

“The Constitutional Court has already established this differentiation, validating the previous retirement laws in the AFPs. Now, I consider that the issue should be dealt with as a priority, but within the framework of the debate on the total reform of the pension system. I do not agree with the opinion of the Economic Commission that would mean the disappearance of the ONP. For this reason, I have proposed a minority opinion based on my bill 3230 —which will also be debated in plenary—, which proposes a universal pension system with three levels to guarantee the right to a pension,” he said.

Withdrawal of AFP: what does the Minister of Economy think?

The Minister of Economy and Finance, Alex Contreras, once again spoke out against the projects that propose the release of AFP funds. During the presentation of the Multiannual Macroeconomic Framework (MMM) 2024-2027, he pointed out that “it is a populist measure that, in the long term, will take away workers’ pensions.”

“There have already been six withdrawals, a seventh is unnecessary. These resources should never have been touched. Nowhere in the world is it proposed to withdraw resources from pensions because that means leaving citizens vulnerable at a time when they cannot even work,” he said.

He added that, for every S/1,000 that a contributor withdraws, in practice it is S/18,000 when he retires. For this reason, the head of the MEF considers that the 11 bills to release funds of up to 4 UIT or 5 UIT “are disproportionate” to the economic situation in the country and would have a negative impact on the attempt to reform the pension system.

Let us remember that the Ministry of Economy and Finance (MEF) pre-published a few weeks ago the proposal of the Multisectoral Commission in charge of evaluating the pension system in Peru, which includes the prohibition of optional and extraordinary withdrawals from the AFPs.

With this initiative, the release of money from the pension fund administrators could only occur in two situations: if it is used as a down payment or to repay a mortgage on a first property or if the affiliate suffers from a terminal illness or presents a cancer diagnosis that reduces their life expectancy and has no beneficiaries to receive a survivor pension.