Pension reform: independents will contribute 5% of their income; employers will withhold

The Economy Commission of the Congress of the Republic will debate today the pension reform opinion that contains the withdrawal of up to 4 UITs from the AFPs, which was not debated in the session last March 13. However, the final document includes articles that have gone almost unnoticed, such as the progressive contribution of independent workers up to 5% of their income.

According to the opinion that brings together almost 70 bills, and which was modified last Friday, between midnight and midnight, independent workers affiliated with the system who receive income that constitutes fourth category or fifth category income are applied a rate of mandatory contribution.

Said rate will be applied gradually as of January 1 of the third year after the entry into force of the law, A rate of 2% will be applied during said year, which will increase by one percentage point every two years to a maximum of 5% (towards 2031).

This rate, which represents one of the cornerstone advances for the pension reform in Peru, is applied to the gross income of each fee receipt issued by the independent worker.

The people, companies and entities responsible for keeping accounts are obliged to withhold the indicated contributions when they pay or credit fourth category or fifth category income provided for in the Income Tax Law (IR).

In the case of independent workers who receive income not subject to withholding or when the withholding agent does not comply with the obligation to withhold contributions, they must declare and pay in accordance with the periodicity rules established by the regulations.

Mandatory 5% contribution of independents to the AFP

The opinion indicates that the withholding agent is jointly and severally liable for unpaid contributions and for the obligations derived from them. The contributions referred to are determined monthly and must be declared and paid within the established deadlines.

For those affiliated with the National Pension System (SNP), these contributions are tax in nature and are administered by Sunat. For members of the Private Pension System (SPP), the deadlines for declaration, withholding and payment, as well as the provisions related to these processes, are carried out in accordance with the provisions of current regulations.