SAN SALVADOR ( Associated Press) – The Salvadoran Legislative Assembly on Tuesday approved a new comprehensive law on the pension system, which increases and lowers by 30% the commissions of pension fund administrators (AFP).
“The increase will be for 200,000 pensioners starting in January. This is 30% more, that is what we will give to the workers. It is a historic step, for the first time a reform has been carried out together with the people”, said Raul Castillo, representative of the ruling party Nuevas Ideas, during the debate.
The legislation was approved by a vote of 67–4 including 12 abstentions and one abstention in the unicameral Congress.
Deputy Susie Callejas, who chaired the special commission studying the new law, attacked opposition legislators who did not support the rules, saying that during the pension system’s 26 years, “16 reforms were made that benefit the working class”. They only made VIP pension”.
President Nayib Bukele, who closely followed the debates in Congress, said on his Twitter account that: “With the pension reform, all current and future old-age pensioners, with pensions of up to $2,300, will see a 30% increase in your pension.” There will be an increase in pension (not only of minimum pension)”.
He explained that AFP would earn only 1% from the 1.9% contribution. The retirement age of 60 years for men and 55 years for women will not increase, and the profitability of savings will increase to 7%.
By approving the new Integral Law on the Pension System, the validity of which will begin eight days after its publication in the Official Gazette, the existing Law on the Savings System for Pensions approved in 1996 has been repealed.
With the new law, all people who have withdrawn 25% of their savings in advance will no longer have to pay it back, nor will they work more years to be able to retire as per the previous rules.
Until now, those who had withdrawn 25% of their savings in advance could not retire unless they returned the entire principal and interest to AFP.
Pro-government representatives criticized three decrees approved in previous years for giving “special” pensions of more than $6,000 to 684 people, most of whom were former officials and politicians.
“This day is historic as a new law for pensioners will be approved. How is it possible that there are VIP pensioners? That’s over. Now, there will be a limit of $3,000″, Reinaldo Cardoza of the conservative National Concertation Party (PCN).