The Plenary Session of the Congress of the Republic approved, with 98 votes in favor, 9 against and 1 abstention, the legislation that allows the total withdrawal of Compensation for Time of Service (CTS). This new legal provision establishes that all workers will have the possibility of withdrawing their accumulated funds until December 31, 2024. During the debate, the president of the Labor Commission, Pasión Dávila, pointed out that, although the measure does not benefit all workers, it will positively impact approximately four million of them.
Dávila highlighted that the total withdrawal of the CTS could have a energizing effect on the economy, providing workers with greater access to their savings in times of need. As this important sum of money will be available to millions of Peruvians, many are looking to know how to calculate the exact amount they should have in their accounts.
How to calculate the CTS? Formula to know how much they have to pay you this 2024
To calculate the Compensation for Time of Service (CTS), Workers must follow the established formula, which applies to those who have worked for a full period. This is: (50% of the monthly salary) + (1/6 of the bonus received in the period) + (1/6 of the total overtime hours) + family allowance (if applicable).
Below is the detail of each component of the formula:
- 50% of monthly salary (without discounts): This means that half of the worker’s gross monthly salary is taken.
- 1/6 of the bonus received in the period: Legal bonuses in Peru are received twice a year, in July and December. For each one, the corresponding sixth must be calculated and added.
- 1/6 of total overtime hours: Here, all the overtime hours worked during the period are added and the total is divided by six.
- Household allowance: If the worker is entitled to a family allowance, this is also included in the calculation.
If the worker receives a variable salary, the calculation of the CTS It will be based on an average of the total salary received during the calculation period. This involves adding all the variable income earned and dividing it by the months of the period to obtain a monthly average, which is then used in the formula for the CTS.
What is the deadline for the CTS withdrawal law to be enacted?
President Dina Boluarte has until May 24, 2024 to enact the law recently approved by Congress. Once enacted, the next step is the publication of this rule in the official newspaper El Peruano, which is essential for the law to officially come into force.
After publication, the Ministry of Labor has the responsibility of regulating it, having a maximum period of 10 calendar days to complete this process.
President Dina Boluarte is the one who must enact the CTS retirement law. Photo: Presidency
Source: Larepublica
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