The president of the Central Reserve Bank of Peru (BCRP), Julio Velarde, pointed out that the ideal for reforming the pension system is to opt for a scheme with individual accounts – like that of the AFPs – and with mandatory contributions.
“Individual accounts have the advantage that they do not defund the (public) budget, but their disadvantage is that only if we live 140 years will we reach what we have or will we have to work more (years)”he said during the presentation of the Inflation Report.
The rest of the reform would come as a result of “details.” However, Velarde stated that the 10% contribution rate, which is compulsorily deducted from the workers’ salaries for their AFP account, is very short. as life expectancy continues to grow.
In the banker’s opinion, with the current rate of 10%, workers would “have to retire later.” Although he talks about a process that will take place “little by little”, he will have to “deduct a little more from the salary for the pension fund because if not, it will not be enough” and he gave as an example Chile, which manages a contribution rate of 15%, as well as in European countries that even exceed it.
The effects of a new withdrawal from the AFP, according to Julio Velarde
Regarding a new withdrawal of funds from the AFP, Velarde argued that “any organization” opposes its release, which, if it occurs, would affect future pensions.
“It is a pension system, pensions are for old age. And everyone grows old, be sure of that. I don’t know any serious person, except some ultra-liberals, but almost everyone believes that the pension system should be maintained. And pensions are very low, a retirement implies that they will be even lower”he highlighted in conference.
Private investment: how much will the engine of Peruvian GDP grow, according to the BCRP?
Private investment covers 80% of the total investments that move in Peru, and in calculations by the Central Reserve Bank, it would rise 2.3% in 2024, after 2023 where it fell 7.3%.
It is worth adding that, in the December 2023 Inflation Report, Julio Velarde contemplated a rate of just 1.8%. And, mining investment, after a negative 2023 (fell 13.3%), will see a rebound of 7.8% in the current.
Source: Larepublica
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