AFP: how much money should I have in my fund to receive a pension of S/1,000?

Retirement is a right of workers to enjoy their remuneration after having concluded their employment relationship and in compensation for the years of service they provided. To enjoy a pension, it is necessary to plan our economy from a young age and practice healthy financial savings habits. Below, we share some recommendations from the Peruvian Association of Insurance Companies to guarantee a dignified old age.

AFP: how much should I save to have a pension of S/1,000?

According to Eduardo Morón, president of the Peruvian Association of Insurance Companies (Apeseg), in statements to the Andina agency, if we want to have a dignified old age and receive a retirement pension of S/1,000, we must consider the following:

• It is important to accumulate savings of S/180,000 in our Pension Fund Administrators (AFP) accounts. In this way, we will be certain of receiving at least that amount through the annuity.
• Make a monthly budget to recognize our true savings capacity.
• Build a financial future through an income layer that allows you to finance expenses and have attractive returns.

For Morón, it is important to start with a goal in which the spending capacity is half of what a person earns. “Why half? Because the children will have already left home and we will have already accumulated several goods that we need to buy again. So, to give an example, let’s imagine that we spent S/2,000 a month. Let’s aim to have, from around the age of 65, the ability to spend S/1,000,” he explained

AFP: what recommendations are there for independent workers?

According to the president of Apeseg, independent workers who do not have a fixed monthly income should prepare their monthly budget so that it is easier to recognize their savings capacity.

“If a household that spends S/2,000 a month saves only 10% of these disbursements, in 50 years the goal of having built its piggy bank would be met that will ensure it has resources for its entire old age,” he said.

What is annuity?

The life annuity is a financial instrument that allows the transfer of resources to a specialized insurance company and they are responsible for depositing that amount of money for life. Within the Private Pension System, there are three types of annuities in the country:

• Retirement income. It is the monthly income that the worker receives upon reaching retirement age or meeting the requirements to access early retirement. In that case, the insurer manages the fund accumulated in the AFP and grants a pension for life to the member and their beneficiaries.
• Disability income. If the worker affiliated with the SPP significantly loses his or her working capacity and his or her disability is recognized, he or she can access this income offered by an insurance company.
• Survival income. If the worker affiliated with an AFP dies, his or her family members or accredited beneficiaries can receive a pension or annuity, as long as they contract it with an insurer.