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FIAP > Destacados Boletines > A statement issued by FIAP argues that the 95.5% rule in Peru defeats the purpose of the pension systems

A statement issued by FIAP argues that the 95.5% rule in Peru defeats the purpose of the pension systems

17 July, 2019

On June 10, FIAP published the Official Statement of its Annual Assembly, held in Santiago, Chile, on May 16.

The points mentioned in said statement were the following:

  1. There is a deep concern in Peru that the law is still in place that allows the one-off withdrawal of 95.5% of the balances saved in the individual accounts of workers, when they reach the official retirement age or meet the requirements for obtaining an early pension.

 

  1. This law defeats the purpose of the pension systems, which is to postpone current consumption to ensure income in old age.

 

  1. Pension systems are mandatorily established, even with tax incentives, so it makes no sense to allow the full withdrawal of the saved capital when pension payments begin.

 

  1. There is concern regarding what the Peruvian authorities will say to pensioners when they have exhausted their savings, although the congressmen and others who approved this law will probably no longer be able to the held accountable for the situation of those who will not have the means to survive in old age. 220 thousand people have withdrawn a total of US$ 5,134 million to date.

 

  1. This situation not only affects Peruvian workers, but also extends to the other countries of the Pacific Alliance. In fact, due to the increase in migratory movements, the member countries of the aforementioned Alliance had advanced towards a fund portability agreement, in order to allow workers to transfer their funds to the countries where they currently reside. The discussion of this agreement has been paralyzed due to the risk that the pension savings of workers from other countries can be spent for non-pension purposes through the Peruvian pension funds.

 

Agreement of the 23rd FIAP Assembly Held in Santiago, Chile

Signed by: The Board of Directors of the International Federation of Pension Fund Administrators (FIAP).

 

 

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