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FIAP > Destacados Boletines > FIAP met with Washington-based international agencies to discuss the current state of the individually-funded pension systems and the reforms needed for improving pensions

FIAP met with Washington-based international agencies to discuss the current state of the individually-funded pension systems and the reforms needed for improving pensions

7 February, 2020

On December 16 and 17, 2019, a FIAP mission met with representatives of the IDB, World Bank and IMF to discuss the current state of the individually-funded defined-contribution pension systems, the reasons for the inadequacy of pensions and the reforms needed for improving pensions.

The World Bank emphasized the importance of the individually-funded contributory systems for financing pensions, and announced that it will publish a good-practice paper for the sustainability of pension system reforms that recognizes the ageing population, the need to adjust contribution rates and the inclusion of novel ideas for universal coverage, such as the use of taxes in individual accounts. It mentioned the experiment conducted in some African countries, in which focus has shifted from the collection of wage-based contributions to collection based on consumption, through sales taxes, a system that could be much more efficient for dealing with informality.

FIAP and the IDB discussed the need for the State to assume its responsibility in providing pensions for the lowest income population and the need to strengthen the institutional framework of social security institutions, since the AFPs cannot solve the issues of informality or population aging, which is not their role. Finally, the IDB mentioned its concern regarding the Peruvian law allowing for the withdrawal of 95.5% of savings funds, announcing that it would soon publish the results of a survey conducted in Peru regarding the use of the 95.5% withdrawal by the population.

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