Currently, Compensation for Time of Service (CTS) is a benefit granted to all workers in Peru, contemplated by national law. This income is provided to workers twice a year with the objective of being an economic support in case of unemployment, so only under that circumstance is it possible to withdraw the money. However, in recent weeks a series of initiatives have been promoted in Congress to allow workers to access 100% of their compensation.
As is public knowledge, with the arrival of the pandemic, a series of laws and bonds were approved to provide a livelihood for the population. It is so December 31, 2023 was the last day on which Peruvians could access all of their money stored in these accountsafter the approval of Law No. 31480 during the pandemic.
CTS: initiative to withdraw 100% of money
The last bill presented for the withdrawal of the entire CTS was proposed by the Alliance for Progress party, on Wednesday, March 27, through the draft Law No. 7400/2023-CR, which seeks to exceptionally authorize the voluntary withdrawal of 100% of the Compensation for Time of Service; For this, the maximum deadline is December 31, 2024.
This proposal is shared with different legislators from other groups that have given similar initiatives, but with the same purpose. Such proposals as that of congressmen Flavio Cruz, Alejandro Soto and Jorge Luis Flores, who also seek to authorize a new release of 100% of funds until December 31, 2024.
What is needed for CTS withdrawal to be approved?
So that formal workers have the possibility of accessing 100% of the CTS, the opinion established by the Labor Commission must be scheduled in the Plenary Session of Congressin which this opinion will be debated and in the same way the legislators will vote.
Once approved by the Plenary of Congress, the responsibility falls on the Executive Branch, which will have to sign within a period of 15 days to ratify it through its promulgation or, in its absence, to observe it. In the event of a refusal, Congress would have to take the opinion to a vote again.
When is Compensation for Time of Service (CTS) paid?
The CTS is paid twice a year, in the months of May and November; The deadline for payment is the 15th of each month. The amount of the CTS is calculated based on the worker’s gross salary; This also includes the bonuses and gratuities to which the worker has access. The CTS percentage is 16.67%. Compensation for Time of Service (CTS) is regulated by the Decree Law No. 19990 and its Regulations, approved by the Supreme Decree No. 003-97-TR. The payment method can be made as follows:
- Deposit in bank account: The employer deposits the CTS in a bank account in the name of the worker.
- Payroll payment: The employer can pay the CTS to the worker’s payroll.
What did the Minister of Economy say about the CTS withdrawal?
Last Friday, after its presentation at the Congressional Committee on Economy, Banking, Finance and Intelligence; The Minister of Economy and Finance, José Arista, expressed his rejection of the bills that seek to authorize a new withdrawal of 100% of the CTS.
“The CTS is a system in which you withdraw based on the period in which you change jobs and cannot find work. That little fund allows you to live, let’s say, those five or six months of forced unemployment that you are going to have. But to the extent that these are accelerating, I think it is not a good idea because the funds have not been created to meet your need for cash, but rather to address this problem of temporary unemployment that you could face”, declared.
Source: Larepublica
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