It has now been five years since government and legislative authorities in Peru began promoting laws that allow workers affiliated with the country’s individual capitalization system to withdraw funds from their pension savings. This door, first opened in 2020, has proven nearly impossible to close. This became evident just a few days ago, when for the eighth time, the Government and Congress of Peru approved and enacted a law enabling a new withdrawal from pension funds.

With the eight withdrawals authorized between 2019 and 2025, the savings painstakingly accumulated by Peruvian contributors have shrunk from US$52.254 billion to around US$22 billion—approximately 10% of Peru’s GDP—leaving 80% of the total workers affiliated with the individual capitalization system with empty accounts to finance their retirements.

Given this situation, the International Federation of Pension Fund Administrators (FIAP) warns that the main consequences of the law authorizing an eighth withdrawal from pension funds are as follows:

1. This measure will impose a heavier financial burden on the Peruvian State and increase borrowing costs, due to the immediate sale of sovereign bonds, which in turn raises credit costs for all Peruvians.

2. In a context of rising life expectancy and high levels of labor informality, the general recommendation is to strengthen pension savings. Unfortunately, this measure moves in the opposite direction, weakening savings.

3. Although pension savings are entirely the property of workers, it is of utmost importance to safeguard their sole purpose: financing retirement.

Finally, for the well-being of workers and the Peruvian population as a whole, we hope this type of policy will not be repeated.

Guillermo Zamarripa
President

Karol Fernández
Executive Vice President

It has now been five years since government and legislative authorities in Peru began promoting laws that allow workers affiliated with the country’s individual capitalization system to withdraw funds from their pension savings. This door, first opened in 2020, has proven nearly impossible to close. This became evident just a few days ago, when for the eighth time, the Government and Congress of Peru approved and enacted a law enabling a new withdrawal from pension funds.

With the eight withdrawals authorized between 2019 and 2025, the savings painstakingly accumulated by Peruvian contributors have shrunk from US$52.254 billion to around US$22 billion—approximately 10% of Peru’s GDP—leaving 80% of the total workers affiliated with the individual capitalization system with empty accounts to finance their retirements.

Given this situation, the International Federation of Pension Fund Administrators (FIAP) warns that the main consequences of the law authorizing an eighth withdrawal from pension funds are as follows:

1. This measure will impose a heavier financial burden on the Peruvian State and increase borrowing costs, due to the immediate sale of sovereign bonds, which in turn raises credit costs for all Peruvians.

2. In a context of rising life expectancy and high levels of labor informality, the general recommendation is to strengthen pension savings. Unfortunately, this measure moves in the opposite direction, weakening savings.

3. Although pension savings are entirely the property of workers, it is of utmost importance to safeguard their sole purpose: financing retirement.

Finally, for the well-being of workers and the Peruvian population as a whole, we hope this type of policy will not be repeated.

Guillermo Zamarripa
President

Karol Fernández
Executive Vice President