This is how the questioned state pension system in Bolivia works, which already collects contributions

The state Public Manager of the Long-Term Social Security of Bolivia begins this Tuesday the collection of pension contributions, after more than a decade of its creation, in the midst of an arbitration award and the mistrust of hundreds of workers.

In the Bolivian Constitution of 2009 it was established that the services of “public security may not be privatized or concessioned”.

These are the main keys to the state pension system.

MORE THAN A DECADE

Bolivian pension funds were managed by the Pension Fund Administrator (AFP) in charge of the private companies Futuro and Previsión, the latter a subsidiary of the Spanish BBVA, since 1997.

In 2010, during the Government of Evo Morales (2006-2019), the Pensions Law was promulgated in which it was determined that the Public Manager will administer the Funds of the Comprehensive Pension System, but its statutes were not established until 2015.

Since then the start of operations of the Manager has been postponed on several occasions for various reasons such as software problems.

Finally, in September 2022, the partial transition to the new state pension system began in the Contributory Regimes, that is, pensions for the elderly, disability and death and semi-contributory, which contemplates the old-age solidarity benefit.

START UP PHASES

The Manager will take charge of the resources of at least 2.5 million workers and from this May 2 employers and insured must deposit their contributions directly in the state entity, which will begin the collection corresponding to April of this year.

Until May 12, the AFPs must receive the procedures of all their affiliates so that the Manager assumes all the operations on May 15.

On June 1st, the Manager will begin to pay benefits to retirees.

AWARD AGAINST THE BOLIVIAN STATE

In 1997, BBVA incorporated the company AFP-Previsión BBV in Bolivia, which after the merger process with Argentaria was renamed Previsión BBVA-AFP.

After the nationalization of the pension services in 2009, the Government and Previsión maintained a series of contacts to start a negotiation process without success, for which the Spanish company went to the International Center for the Settlement of Investment Disputes (ICSID) in 2018 ).

BBVA argued that the delay in the start of the operations of the Manager caused its presence in Bolivia to be extended and the impossibility of making use of its investments.

In 2022, ICSID issued an arbitration award in which it obliges Bolivia to indemnify BBVA with US$105 million for the “unjustified delay” in the process of nationalizing the pension system.

The Bolivian government indicated that “assumed all substantiated defense actions and presented the pertinent evidence”, but that “were not assessed” by the ICSID. To date the case has not yet been resolved.

DISTRUST

Since the nationalization of the pension administration was announced, several sectors have expressed their concern about the destination of their contributions and have demanded that there be social control of the funds.

In recent weeks there have been several protests against the Manager, as they fear that the Government could freely use these resources and put the social security system at risk.

The manager of the Manager, Jaime Durán, reported that retirees will stop paying a 1.31% commission and will no longer charge the four commissions that the previous administrators used to request and will only be one, 0.5%.

Source: EFE