Reform that raises the minimum age for early retirement is approved

Finally, the Plenary Session of the Congress of the Republic approved, in the first vote, the project to reform the Peruvian Pension System (SPP) promoted by the Fuerza Popular bench, which establishes, among other novelties, the creation of a consumption pension based on of contributions of up to 1% of the VAT.

There were 56 votes in favor, 47 against and 10 abstentions that put an end to a long discussion that even disassociated the seventh withdrawal of AFP funds to expedite its approval.

However, the wording of the letter makes it clear that those who choose to break the intangible nature of their funds will not be able to access a minimum pension once the new pension reform comes into force.

Now, a second vote will be necessary, which will take place in the plenary session organized next week. The initiative, as it came out of the Economy Commission of Congress, only had partial support from the Ministry of Economy and Finance (MEF), despite warnings regarding a strong impact on tax collection.

The diffuse pension reform approved last night considers four pillars for raising funds, in a single system that leaves the current private system in a better position than the ONP: contributory, non-contributory, semi-contributory and voluntary.

This last pillar is the one that considers a pension for consumption, which corresponds to 1% of the sum of the value of the payment vouchers issued within each fiscal year, with a limit of 8 UIT per year (S/41,200 in 2024) of total consumption, from purchases that must not exceed S/700.

Multiple specialists have considered that this mechanism would be unviable in an informal economy, in which, in addition, many of the foods in the basic basket are exempt from paying the tax. VATthus putting unnecessary pressure on the system.

The standard also contemplates a mandatory contribution rate for independent workers and The age to access the Special Early Retirement Regime (REJA) in the Private Pension System increases from 50 to 55 years.

A minimum pension of S/600 is also determined for contributors to the new system, and the obligation of people over 18 years of age to open a retirement account.

Banks and savings banks will have accounts

The market is also opened so that banks, municipal savings banks, financial institutions, insurance companies and cooperatives can open pension accounts for their clients.

Affiliates may use up to 25% of their funds to amortize a mortgage loan, which has been used for the purchase of a “single urban property, the purpose of which is as a residential home.”