MEF: Private pension system should have lower commissions

Yesterday, the head of the Ministry of Economy and Finance (MEF), Alex Contreras Miranda, appeared at the extraordinary session of the Economy Commission to support bill 6120, which proposes creating a new Peruvian pension system (see infographic).

More competition

During his presentation, Contreras said that “Greater competition is necessary in the private pension system that leads to lower commissions.”

He added that one of the main criticisms of this system is that even in periods in which the value of the funds fell, the AFP They continued to accumulate profit. For this reason, for example, flow commissions represented 70% of the profits of these companies.

So we have to Profuture It has a 1.69% commission rate on flow, followed by Prima (1.60%), Integra (1.55%) and Habitat (1.47%). In addition, they charge an annual commission on the balance that reaches up to 1.25% and the insurance premium of 1.84%, which is the same in all four companies.

In commissions alone, the companies received S/855 million 567,000 from January to September 2023, which generated a net profit of S/362 million 256,000.

The minister also specified that although it is sought that more entities participate in the administration of pension funds, not “anyone” could do it, but rather They must meet certain requirements and be under regulation special to guarantee the payment of pensions.

In turn, the ungrouped congressman Carlos Anderson He maintained that this particular measure ignores that in Peru the financial system is “oligopolistic.” “When we say that they open (the system) for the banks, which banks? The one that also (owns) the AFP? What does the insurance company also have?” He said.

What does the proposal bring?

In detail, the initiative, which is characterized by being inclusive and gradual, according to the MEF, proposes the implementation of four pillars: contributory, voluntary, semi-contributory and non-contributory.

“This is not the panacea, it does not solve all of the country’s structural problems, but it does help to solve the vast majority of the problems that the current pension system has: low coverage, low pensions, it does not consider the informal sector and low competition,” the minister admitted.

Priorities

The MEF proposal was long in coming, it arrived Congress only on October 11 and this same month it has been supported by the Economy Commission. Meanwhile, almost twenty bills that have been presented since 2022 and that seek to authorize a seventh withdrawal of AFP contributions are still waiting their turn.

The authors of these projects have requested an extraordinary session to present all the proposals and start the debate, so that an opinion is reached in December.

However, the president of this working group, César Revilla (Fuerza Popular), far from listening to the request, has expressed his position in line with the MEF, pointing out that the viable thing would be to approve a limited withdrawal only for the unemployed for a maximum value of S/9,900 (2 UIT).

Mobilization announced to request withdrawal of the AFP

Congressman José Luna Gálvez has initiated a call for mobilization to demand the withdrawal of up to S/19,800 (4 ITU) of the AFP funds for this Thursday, November 9 at the Campo de Marte.

Added to this demand is compliance with the Recognition Bonus and the promulgation of the law that will allow the return of Fonavi. “We Peruvians are not here for handouts or subsidies, allow us, with our own resources, to get ahead,” Luna said.

It should be remembered that 61% of AFP members agree with the proposal to authorize a new withdrawal, according to the latest national survey carried out by the IEP.

The word

Alex Contreras Minister of Economy and Finance

“We are going to show all the flexibility to enrich this proposal, which is the result of the consensus between the BCRP, the SBS, the MTPE, PCM and MEF, but starting over would be going backwards.”