Thursday, June 1, 2023

MEF: The new AFP withdrawal would involve a withdrawal of up to S/25 billion and increases the risk of poverty

Congress continues to evaluate proposals that propose new withdrawals from the Pension Fund Administrators (AFP), however, both the Ministry of Economy and the Central Reserve Bank (BCR) have expressed their rejection of legislative proposals.

Now the Ministry of Economy and Finance (MEF) warns that this seventh recession means an additional squeeze of between S/ 22 and S/ 25 billion of money already withdrawn.

In total they represent almost 1/4 of the resources that AFPs currently have, but why would the new provision be negative?

The Deputy Minister of Economy Juan Pichihua pointed out that the approval of this project by the Economic Commission of Congress will increase the risk of poverty in old age and the legal standards of social protection will be interrupted.

As they explained, 77% of federal pensioners have less than 1 UTI pension savings, a total of 4 million members, while some 2.3 million contributors have a balance equal to zero.

In addition, they mentioned that the previous six withdrawals of funds of S/88 million have weakened the private pension system, which generates a lack of protection for the Allies in the future and also affects the evaluation of the country.

The BCR also pointed out that the measures could increase the cost of public finance by increasing the interest rate on public bonds, adding that it could also generate inflationary pressures.

BCR official Adrian Armas added that it is estimated to have an S/D pension of 65 years, you should have S/100 thousand in savings.

There is still no formal proposal from the State to reform the pension system

At the moment, the MEF indicates that it is necessary to have a multi-pillar system, which has an auxiliary, non-contributory and voluntary component; has a minimum and proportional pension; and with the approval of standards and criteria, simple contributions and review commissions.

It should be noted that, according to the MEF, only 30% of the population economically contribute to the pension system and 57% of those over 65 do not receive a pension.

For its part, the BCR indicated that currently 9% of the population is of retirement age, in the year 2000 18% of Peruvians will be retired.

Nation World News Desk
Nation World News Desk
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