Will Congress’s pension reform include more people?

“We would also need a tax reform”

César Abanto, professor at the USMP

It is a long process that not only involves a pension reform but also a tax reform that establishes the obligation to issue invoices and invoices at all levels and everywhere. This in relation to the pension due to consumption, which was one of the points that the multisector commission 20-22 also addressed, where a series of mechanisms were proposed aimed mainly at trying to ensure that the 80% of workers who are outside of pension protection due to informality could be Incorporated. These types of reforms are long-term work. For Chile’s reform in 2008, for example, it took two years to tour the entire country, looking at different options and intervening with those involved. For me, this reform has sought to be approved in an accelerated manner and without adequate technical debate. Are we talking then about a reform for everyone or a reform only for one group? There are no radical changes aimed at reducing that large group of people without some type of pension. On the other hand, I believe that one of the redeemable measures is that the ONP is being strengthened through the transfer of the non-contributory regimes of the Midis; that is, Pension 65 and Contigo. It seems positive to me that Pensión 65 now includes not only the extremely poor but also people in poverty, as long as it is only a transitional situation and not a permanent situation.

“The central point should be to extend coverage”

Diego Macera, director of IPE

Some progress was made towards including people who previously did not have a retirement pension into the pension system, but it is not close enough. The most important proposal is the consumption pension, although I have doubts about its convenience, effectiveness, scope and depth. The central point regarding the pension reform system would have to be to extend the coverage and the depth of contributions from members. Other mechanisms should be considered that can give people an incentive to continue contributing, such as automatic deductions to link certain payments for basic services, such as electricity and telephone, or even in the financial system to the contribution system. That would probably be better than the current consumption pension structure, starting with the fact that you don’t have that tax cost. In any case, it must be evaluated because I do not know the example of any other country that has implemented something similar. The most problematic thing about the consumption pension initiative is its regressivity; That is, there are higher transfers with public money to people who have greater consumption possibilities. The system towards notional accounts makes sense. There will be concerns about funding, but at least it becomes more predictable and more transparent.

“We are experimenting with our social security”

Noelia Bernal, professor at Pacific University

Without a prior debate, and assuming that the rule has not been modified, I consider that there will be a slight improvement in Pensión 65 coverage. That is, a pension of S/125 will be given to a small group of new adult pensioners over 75 years, the first group to be served. So, there will be a small increase in coverage. However, it is still an insufficient and discriminatory policy because, for example, those aged 74 would not be able to access it. All older adults should be covered. On the workers’ side, we will have to evaluate the effect that the consumption pension will have on membership and we are actually experimenting with our social security due to the irresponsibility of some congressmen because no country in the world has this. It seems to me that there will be very few who join this measure because the majority of workers do not have high incomes and most of their money is used on foods that are already exempt from VAT. They will not be incentivized. Those who would benefit the most are the clients of the private system and the AFPs themselves that are going to charge commissions. On the other hand, the ONP would be growing due to the flow of money that would come from those who switch to this system, but they will be fiscally expensive clients.

“Those with middle and high incomes would be benefiting”

Javier Olivera, professor at the PUCP

It is not a reform that has attacked the entire problem. There is still a proliferation of different programs and pensions that do not talk to each other. Likewise, the consumption pension only translates into the benefit of people with greater resources. What would be done in practice is the return of 1% of purchases in a formal store and those who buy in formal stores are the ones who earn the most. Those are the people who will be able to reduce their tax payments the most, while the State receive less money. It seems that this has worked more in favor of the AFP themselves. Likewise, what this new reform is creating are the minimum pensions for those who are in the AFPs and that money comes out of our taxes, also generating a very large fiscal cost, that would have to be estimated. That is, the money of all those who pay taxes is going to go into the pockets of people who do not need that type of subsidy. Those with medium and high incomes would be benefiting. The reform is not well focused. On Pension 65 I think the scheme should be universalized. It is good that the non-extreme poor are now included, but the ideal would be for the money that the State intends to pay for the AFP minimum pensions to be used for a universal pension. On the other hand, I agree with the mandatory contribution for independents, but first the system should be more articulated.