The Minister of Economy and Finance, Alex Contreraspointed out this morning that an eventual seventh retreat of the Pension Fund Administrators (AFP) would have a detrimental impact on the pension system reform efforts that are underway with proposals from Congress and the Executive.
The head of the MEF emphasized that there are two fundamental concerns around the release of funds. Firstly, there is the long-term concern that this process could leave a growing number of retirees unprotected, as fewer and fewer people will have access to a pension.
Secondly, he pointed out that there is concern that a new withdrawal would generate a significant outflow of capital that would negatively impact the country’s fiscal management. “It would generate a significant outflow of capital that affects fiscal management,” he pointed out during his presentation at the Congressional Economy Commission.
This is because the Pension Fund Administrators (AFP) used to be the main buyers of treasury bonds. The decrease in their investment capacity could make it difficult to place government bonds in the local market and even increase financing costs.
The minister also highlighted the vulnerability of older adults compared to young people, since the latter have less capacity and productivity to work at the same pace. “That generates a risk of poverty, it also generates a fiscal risk in the future, because the State cannot leave many people unprotected,” he commented.
Finally, Contreras expressed the Government’s willingness to discuss, dialogue and seek consensus, always taking into account the short and long-term implications of said decisions.
Source: Larepublica
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