As is known, a bill of law presented by the government for reforming the existing private pension system is currently being discussed in the Legislative Assembly of El Salvador. The proposed reform recommends that people who earn less than twice the minimum wage (USD 502) should contribute only to the PAYGO system (managed by a new agency, the National Institute of Pensions, INP). People who earn more than USD 502 will also contribute to the PAYGO system, but contributions on income over that amount will be paid into the private system managed by the AFPs.

The proposal by the Salvadoran government, in practice, reopens the PAYGO system for a large majority, with the consequences and damages this entails for the workers and the economy of the country. This is so, since 70 percent of Salvadorans do not earn as much as two minimum wages, and they will therefore have to switch their entire flow and fund to the PAYGO system. The system will be mixed for the remaining 30% of the population, which earns more than two minimum wages.

In this context, FIAP has wished to make its opinion heard by the media and the local authorities of El Salvador. So last February 17, Santiago Montenegro, the Chairman of ASOFONDOS (Colombia) and a FIAP Vice President, visited the country and held interviews with the major local media and TV outlets. The purpose of his visit was to alert the authorities to the risks and hazards involved in the government’s proposed reform of the pension system. On April 6 and 7, in turn, Guillermo Arthur, President of FIAP, also visited El Salvador to give his opinion on the matter, in interviews with the major local media and TV outlets.
The top press releases/interviews published with regard to the visit by the FIAP spokesmen are given below:

Visit by Santiago Montenegro:

• “Mixed system will not be sustainable: ASOFONDOS”
• “They want to cover up a fiscal void like they did in Argentina”

Visit by Guillermo Arthur:

• “This is a fiscal reform, not a pension reform”
• “FIAP criticizes the countries pension reform proposal”
• “TV Interview – ‘Frente a Frente’” – Program” – Pensions, Chilean experience and reform presented by the Government.