AFP Retirement: what was the last debate on the release of the pension fund?

The proposals to authorize a seventh withdrawal from the Pension Fund Administrators (AFP) did not prosper in the Congress of the Republic. In nine ordinary sessions, the Commission on Economy, Banking, Finance and Financial Intelligence, chaired by parliamentarian César Revilla, from Fuerza Popularfailed to approve an opinion that meets the consensus of legislators and incorporates the observations of various organizations specialized in the matter.

Both the Minister of Economy, Alex Contreras, and the head of the SBS, María del Socorro Heysen, and the president of the Central Reserve Bank of Peru (BCRP), Julio Velarde, have spoken out against this measure because it would harm the management fiscal and would affect the retirees of our country. Below, we tell you the details of the last debate on the AFP withdrawal in Congress, how many projects were pending to be addressed and what is missing for it to be approved in 2024.

What was the last debate on the AFP withdrawal in Congress?

The last session of the Congressional Economy Commission was held on Wednesday, December 13, two days before the end of the first semester of the 2023-2024 legislature. On that occasion, it was not contemplated to debate the projects to authorize a seventh AFP withdrawal on the ordinary agenda, but parliamentarian Guido Bellido requested its inclusion.

This proposal was rejected with 12 votes against and only 11 in favor., which caused disagreement among parliamentarians who support this measure and thousands of members who expressed their indignation on social networks. But this is not the first time that an agreement has not been reached in the Economy Commission.

In the ninth extraordinary session of this working group, held on December 12, the presentation of the report on the modernization of the pension system was scheduled, which includes a targeted AFP withdrawal of up to S/9,900 (2 UIT) . However, several legislators expressed their disagreement with debating both issues together. The end result was that César Revilla accepted the fourth interim proposed by legislator Jorge Montoya, from Renovación Popular, and it will have to be reviewed again.

Until before these last sessions, only congressmen Segundo Montalvo (withdrawal of up to 2 UIT), Víctor Cutipa (release of up to 3 UIT), Guido Bellido and José Luna (disbursement of up to 4 UIT) had supported the scope of their law, which seeks the releases of private pension funds. In addition, the heads of the Ministry of Economy and Finance, the Central Reserve Bank, the Superintendence of Banking, Insurance and AFP (SBS) and the Association of Pension Funds had expressed their technical opinion regarding the negative impacts that this would bring. extent.

AFP withdrawal and new UIT value: what is the new calculation of pending bills?

As is public knowledge, the Government of Dina Boluarte made official the new value of the Tax Tax Unit (UIT), which is equivalent to S/5,150 for 2024. In this way, there was an increase of S/200 compared to the previous year and said update will affect the amounts proposed in AFP withdrawals.

Let us remember that, even before the end of the first semester of the ordinary legislature, 28 bills to authorize AFP members to withdraw money from their Individual Capitalization Accounts (CIC). Of these initiatives, 12 seek the release of up to 4 UIT, three seek to increase the amount to acquire a property or pay debts through the mortgage guarantee, and the majority of the proposals seek that citizens have their savings to face the impacts of the economic recession.

Next, review this list with all the proposals that have been presented in Congress and their updated calculation with the new ITU value:

1. AFP Withdrawal from 2 UIT (S/10,300) – Segundo Montalvo Cubas (Free Peru)
2. AFP withdrawal of up to 4 UIT (S/20,600) – Digna Calle (Vamos Perú)
3. AFP withdrawal of up to 3 UIT (S/15,450) – Víctor Cutipa (Peru Bicentennial)
4. AFP withdrawal of 50% of funds – Elías Ávalos (Vamos Perú)
5. AFP withdrawal of 70% of funds – Américo Gonza (Perú Libre)
6. AFP withdrawal of 50% of funds for home purchase – Patricia Juárez (Fuerza Popular)
7. AFP withdrawal from 3 UIT (S/15,450) – Víctor Flores (Fuerza Popular)
8. AFP Withdrawal from 5 UIT (S/25,750) – Jaime Quito
9. AFP Retirement from 4 UIT (S/20,600) – Guido Bellido (Peru Bicentennial)
10. AFP withdrawal of 25% to pay debts with mortgage guarantee – Melissa Córdova (Avanza País)
11. AFP withdrawal of 100% for home purchase – Ilich López (Popular Action)
12. AFP withdrawal from 4 UIT (S/20,600) – José Luna (Vamos Perú)
13. AFP withdrawal from 4 UIT (S/20,600) – Jorge Luis Flores Ancachi (Popular Action)
14. AFP withdrawal from 4 UIT (S/20,600) – Kelly Portalatino (Perú Libre)
15. AFP withdrawal from 4 UIT (S/20,600) – Luis Aragón (Popular Action)
16. AFP Withdrawal from 4 UIT (S/20,600) – Mariza Taipe (Free Peru)
17. AFP withdrawal from 4 UIT (S/20,600) – Flavio Cruz (Perú Libre)
18. AFP withdrawal of up to 3 UIT (S/14,850) – Edgard Reymundo (Democratic Change-Together for Peru)
19. AFP withdrawal from 4 UIT (S/20,600) – José Pazo (Somos Perú)
20. AFP withdrawal of 100% of funds in cases of death of the member – Digna Calle (Vamos)
21. AFP withdrawal from 4 UIT (S/20,600) – Wilson Quispe (Perú Libre)
22. AFP withdrawal from 2 UIT (S/10,300) – César Revilla (Fuerza Popular)
23. AFP withdrawal of 90% of funds due to terminal illness – Katy Ugarte (Parliamentary Unity and Dialogue)
24. AFP Withdrawal from 1 UIT (S/5,150) – Jeny Lopez (Fuerza Popular)
25. AFP retirement in cases of terminal illness or cancer – Germán Tacuri (National Concertation Magisterial Block)
26. AFP withdrawal from 4 UIT (S/20,600) – Isabel Cortez
27. AFP Retirement of 5 UIT (S/25,750) – Segundo Quiroz (National Concertation Magisterial Block)
28. AFP retirement from 4 UIT (S/20,600) – Alfredo Pariona (Not grouped).

¿What is missing for the AFP 2023 withdrawal to be approved?

In March, the second semester of the 2023-2024 legislature of the Congress of the Republic will restart. Despite the fact that the prediction of targeted withdrawal of 2 UITs proposed by the president of the Economy Commission, César Revilla, did not achieve the acceptance of the majority of legislators and was sent to the interim room, It is expected that it can be reviewed again, since this proposal is in line with the MEF recommendations.

However, there is still no consensus between the majority of congressmen and the Executive Branch to approve a seventh release of pension funds. On the one hand, there is a group of congressmen who seek a seventh withdrawal from AFP and, on the other hand, the MEF has ratified its position of observing this initiative if it does not contemplate a limited withdrawal. It is worth mentioning that, previously, the Executive Branch observed these norms, but the Constitutional Court declared them viable.