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10 December, 2018

FIAP successfully held a Roundtable with Latin American Employers

The International Federation of Pension Fund Administrators (FIAP), together with the ILO Office for Latin America and the Caribbean, the ILO Office for Employers’ Activities (ACT / EMP) and the National Confederation of Private Business Institutions – CONFIEP- successfully held the Round Table with Latin American Employers on October 19, 2018 in Lima, Peru.

According to the OECD, in many countries the total replacement rate (pensions compared to salary) that workers obtain from the pension systems, is an insufficient percentage of the earnings received during the years of active life. So the question posed is: where will these pension increases come from? On the one hand, they are unlikely to come from contributory public PAYGO systems. Demographic pressures and financial crises are pressing these systems to reduce benefits and impose more restrictive conditions for accessing them.

In this context, these mandatory individually funded systems (privately managed) have shown great operating strength and have resulted in significant progress since they were implemented, despite the fact that there are differences between the expected pensions of members and the estimated pensions that such systems would provide.

Given the above, and in a context of accelerated demographic changes and low contribution density, important challenges for the labor market are generated, which has given rise to some criticism from the opponents of the individually funded systems. Given the importance of this issue for the private sector, the ILO, FIAP and CONFIEP convened this Round Table to generate a discussion among business leaders and the AFPs in Colombia, Chile, Peru, El Salvador, Mexico and the Dominican Republic, aimed at identifying ways to improve and strengthen the private pension systems.

The speakers on this occasion were: Karol Fernández, FIAP Research Consultant, on the benefits of the private pension systems for workers, employers and the economy in general. Santiago Montenegro, Asofondos – Colombia Chairman, on the non-viability of the PAYGO pension systems in Latin America. Gonzalo Renfijo, CEO of Pictet Asset Management Iberia and LATAM, spoke on the critical situation of the public pension systems in Europe and how private systems are becoming more important. Finally, Randall Arias, Principal ACT/EMP Specialist, presented some reflections on the role of business organizations in relation to private pension funds.

Here you can download the academic program of this Round Table, the presentations made and a report with the summary of it.

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