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FIAP > Press Releases > FIAP expresses concern regarding new mechanism for withdrawing pension funds in Peru
1 April, 2021

FIAP expresses concern regarding new mechanism for withdrawing pension funds in Peru

The President of the International Federation of Pension Fund Managers (FIAP), Guillermo Arthur, expressed concern regarding the future of pensions in Peru today, following the approval by the Peruvian Congress of an initiative that will allow all members of the AFP system in that country to make withdrawals from their pension funds.

The bill of law will allow the withdrawal of 17,600 soles (US$ 4,800 or 3.5 million Chilean pesos). However, a supplementary provision was added during the debate, giving members over the age of 40, with no recorded contributions in the last five years, the option of withdrawing up to 100% of the funds.

The approval of these new retirement mechanisms for members of the private system in Peru, further weakens the system, whose main purpose is to increase workers’ savings to improve pensions.

These withdrawals could result in a reduction of up to 50% of the funds held in the system. It is worth mentioning that, as a result of the previously approved mechanisms, 39.4% of the pre-existing funds have already been withdrawn. We are witnessing an act of irreparable damage, whereby more than 4 million members will be left without a balance in their individual accounts,” Guillermo Arthur said.

The President of the international body stressed that these measures are the purest expression of populism and demagoguery, and show that, far from seeking improvements in pensions, those promoting them are seeking the destruction of a system that has proven to be sustainable and able to finance good pensions to regular contributors, foregoing the substantial contribution they have made to the economic development of our countries




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