MEF proposes that the seventh AFP retirement be for the unemployed

Given the more than 12 bills presented in the Congress of the republic To authorize a seventh withdrawal of AFP funds, the Executive Branch had no choice but to give in. However, he specified that it would be more convenient for this to be a focused measure and for them to concentrate on working on the reform of the pension system.

An unexpected announcement

Yesterday, the Economy Commission received the head of the Ministry of Economy and Finance (MEF), Alex Contreras Miranda, who explained how a withdrawal of up to S/19,800 (4 UIT) from AFP funds could be harmfulnot only for the affiliates, but for the country as a whole (see infographic).

At a microeconomic level, the six withdrawals authorized between 2020 and 2022 have generated the risk of lack of protection in old age for 2.3 million Peruvians who do not have a single sol for their pension, and 1.3 million would be added with a new withdrawal.

“In the future, (these people) will depend on their luck, on the ability they have to recover those funds, and that for the State means a tax riskbecause it is likely to lead to the expansion of social programs,” the official explained.

While, on the macroeconomic side, he pointed out that pension funds are invested in different assets such as bonds, stocks, among others, that finance companies and infrastructure. Since these funds do not exist in soles, due to withdrawals, The State must seek financing in dollarswhich generates an additional cost.

For their part, the congressmen retorted that the members do not have to bear the burden of financing the State, and that the T.C. defined that the withdrawals are not unconstitutional.

José Luna Gálvez ( Podemos Peru ) pointed out that workers, being owners of capital, must have the power to decide over it. “The decision is cost-benefit. If the BCRP says that Fund II in the last five years has received 23% nominal profitability and 0.46% real profitability; and only in 2021, it says -7.55% and -14.76%, so, either I keep losing or I keep having,” Luna said.

In response to the comments, the minister reaffirmed that the proposal, as proposed, is “populist”; However, limiting it to the unemployed would be viable. “Let’s focus this measure,” said Alex Contreras.

It should be noted that, as of March of this year, The AFPs registered 8.9 million members with 3.4 million active contributors, so it follows that 5.5 million do not contribute due to lack of employment, and would be the potential beneficiaries. However, this group also includes independent workers with irregular contributions.

Although the support of the first two projects (03585/2022 and 04190/2022) that seek a release of pension funds was also on yesterday’s agenda, it did not happen due to lack of time, and they will be rescheduled for the next session.

Reactions

Alex Contreras, Minister of Economy

“I don’t work for a AFPI’m not even going to do it. I am an academic, I have worked my entire career in the public sector and I hope to continue serving my country. My interest is to preserve fiscal sustainability going forward.”

Carlos Anderson, non-group congressman

“If the economy were growing at 4% or 5%, if there was true job creation, if real wages were on the rise, surely we would not be talking about the need for a new withdrawal (from AFP).”