AFP 2024: how much money would you have to save to access a pension of S/1,000 per month?

Financial planning for retirement is becoming a topic of growing interest among Peruvian workers. In a context in which economic security in old age is a constant concern, knowing how much money is necessary to save in the Pension Fund Administrators (AFP) to obtain a remuneration of S/1,000 per month is essential.

According to the Superintendency of Banking, Insurance and AFP (SBS), until the end of 2022, 40% of AFP members who were close to retiring had no balance in their accounts. Therefore, they would not receive any pension if they decided to stop working. Let us remember that this right of workers is activated when the employment relationship ends and in compensation for years of service. Below, review some recommendations from the Peruvian Association of Insurance Companies in this regard.

AFP 2024: how much should I save to receive a pension of S/1,000?

According to Eduardo Morón, president of the Peruvian Association of Insurance Companies (Apeseg), it is essential that AFP members establish a goal in which their payment capacity is half of their income. “Why half? Because the children will have already left home and we will have already accumulated several goods that do not need to be bought again. So, to give an example, let’s imagine that today we spent 2,000 soles a month, so we aimed to “have the ability to spend 1,000 soles a month since around the age of 65.”he said in statements to the Andina agency.

In that sense, he considered that the accumulation of S/180,000 in the accounts of the Pension Fund Administrators (AFP) is a crucial milestone to ensure a pension of S/1,000. “With that we will be certain that we will receive at least that amount, using a financial instrument called an annuity,” he indicated.

Likewise, he maintained that having a monthly budget to recognize true savings capacity and build a financial future, through an income layer, that allows financing expenses and having attractive returns, are other considerations to ensure a dignified old age. and receive a retirement pension of S/1,000 per month.

What is the annuity about?

According to the Peruvian Association of Insurance Companies, the 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”. It is worth mentioning that it is granted by an insurer to AFP members after a person retires, becomes disabled or dies. In this regard, there are three types of annuities:

1. Retirement income: when the worker reaches retirement age or meets the requirements to access early retirement, he or she receives a monthly income. In this case, the insurer is in charge of managing the fund accumulated in the AFP and provides a lifetime pension to the member and his/her beneficiaries.
2. Disability income: if the employee affiliated with the SPP suffers a significant loss of his or her working capacity and is recognized as disabled, he or she will have the possibility of accessing this income provided by an insurance company.
3. Survival income: in the event of the death of a worker affiliated with an AFP, family members or accredited beneficiaries have the possibility of receiving a pension or annuity, as long as they contract it through an insurance company.

AFP 2024: what should independent workers do?

The president of the Apeseg mentioned that independent workers who do not have a fixed monthly income They should create a monthly budget in order to facilitate the identification of their savings capacity.

Likewise, he said that if a family that spends S/2,000 manages to save only 10%, in a period of 50 years they could reach the goal of having a reserve that guarantees them maintaining their retirement.

“If I go back to the example of that household that spent 2,000 soles a month. If it separated only 10% of its expenses, in 50 years it would meet the goal of having built its piggy bank that will ensure it has resources for its entire old age,” he said.

What is an AFP?

The Pension Fund Administrators (AFP) are private entities whose objective is to manage pension funds under the modality of personal accounts, which is why they are owned solely by each worker. In this way, they can provide retirement, disability, survival pensions and cover funeral expenses. The AFPs were created in 1993 and operate within the Private Pension System (SPP), being controlled and supervised by the Superintendency of Banking, Insurance and AFP (SBS).