They present a new bill to reform the pension system: what does it consist of?

The Congressional Commission on Economy, Banking, Finance and Financial Intelligence has so far failed to approve a proposed opinion to reform the Peruvian pension system. When an agreement was not reached, the members of this parliamentary working group restarted a series of debate tables to collect the technical opinions of the MEF and other competent authorities in the country.

With the aim of contributing to this discussion, the Podemos parliamentarian, José Luna, presented this Wednesday, April 24, Bill No. 7674/2023-CR in order to guarantee the granting of decent pensions, increase their coverage to all citizens and make this pension model efficient, inclusive and universal.

New bill to reform the pension system: what does it propose?

Congressman José Luna submitted an initiative for a “law to reform the Peruvian pension system in order to guarantee its access to all Peruvians and the granting of decent pensions” to Parliament’s documentary process. This proposal is based on the following pillars:

Seed capital

This pension fund is created from the birth of each citizen and from the entry into force of this rule, which is granted through their individual capitalization accounts. Its amount will be determined by the Ministry of Economy, taking into account macroeconomic stability and fiscal balance, and has an intangible nature. That is, it cannot be used for any reason other than to ensure a future pension.

Contribution for consumption

This mechanism will serve to increase the fund accumulated in the individual capitalization accounts in both pension systems and is generated by the consumption of goods and services carried out by natural persons, who must support them in payment slips that contain the corresponding DNI. This contribution amounts to 1% of the total consumption made with a maximum of 24 UIT per year. It is worth emphasizing that this provision will take effect as of January 1, 2025.

Incorporation of independent and non-formal workers

A mandatory contribution rate will be applied to self-employed workers who receive fourth or fifth category income so that they benefit from the consumption contribution. This rate will be defined by the Ministry of Economy progressively and may not be higher than that provided for dependent workers.

Likewise, non-formal workers who do not have fourth or fifth category income, to benefit from the consumption contribution mechanism, must join any pension system and pay monthly to their individual account a contribution of at least 1% of the ITU.

Entry of new actors

With the purpose of improving competitiveness, it is proposed to authorize the entry of companies in the financial system (banks, finance companies, savings banks and insurance companies) as pension fund managers, under equal conditions of competition and under the provisions established in the Law of the Private Pension System and complementary regulations.

fixed return fund

This type 4 pension fund will be a new pension product offered by the AFPs, as well as by companies in the financial system. Its character will be that of a long-term pension deposit fund with a fixed annual interest rate, capitalizable and commission-free. In addition, it will have intangible status until retirement age and will be insured by the Deposit Insurance Fund.

Performance fee

The only commission charged by the AFPs and companies of the financial system on pension funds type 0, 1, 2 and 3 is carried out under this scheme that considers the profitability of the managed fund, expressed in percentage terms of the profits generated in the year. .

What other changes does José Luna’s bill seek?

In accordance with Bill No. 7674/2023-CR, the first paragraph of article 1 of the Law of the Private Pension Fund Administration System is modified, with the objective of incorporating companies of the financial system into the SPP which provides protection against the risks of old age, disability and death.

Likewise, a change is made to the first paragraph of article 21 of Supreme Decree No. 054-97-EF, Single Text of the Law of the Private Pension Fund Administration System, to add the ‘seed capital’ fund and the ‘consumption contribution’ to the composition of the individual capitalization accounts.

Finally, the Ministry of Economy will evaluate the progressive incorporation of ‘seed capital’ for Peruvians between 0 and 18 years of age and must regulate said norm within a period of no more than 180 days from the day following its publication in the official gazette. A Peruvian man.