FIAP

News

FIAP > Boletín – Recientes > Pensions Progress Report No. 5 – 2019 / August-September 2019

Pensions Progress Report No. 5 – 2019 / August-September 2019

16 October, 2019
  • Crisis in PAYGO systems worldwide. In Argentina, the social security deficit is US$ 14,000 million per year, according to the Latin American Economic Research Foundation (FIEL). In Brazil, despite the reform, social security expenditure and the deficit will continue to grow in 2020. Social security expenditure is expected to increase by R$ 51.8 billion compared to this year and the deficit of the public system, the INSS, is expected to be $ 244.2 billion in 2020, 13.5% more than expected this year.
  • In Brazil, the Senate approved the pension reform in the first round of voting. The Senate is expected to consider making amendments to the bill before it is submitted to a second round of voting.
  • In Colombia, the Minister of Labor, Alicia Arango, confirmed that the pension reform, including the Colombia Mayor and Periodic Economic Benefits Plan (BEPS) programs, will be ready by the end of the year.
  • In Peru, the Ministry of Economy and Finance continued assessing the possibility of allocating part of the General Sales Tax (IGV – Value Added Tax) to the pension fund, as part of the measures to formalize the country’s economic activities.
  • In Chile, the Government will modify the formula for calculating the programmed withdrawal interest rate. This rate will now be calculated on the basis of 80% of the interest rate derived from a rate vector and 20% of the average annual rate of return of pension funds C, D and E.
  • Flexibilization of investment options. In Chile, the Pensions Superintendent, Osvaldo Macias, announced some 9 regulatory changes to make the AFP investment regime more flexible. They include: authorize investment in vehicles with gold exposure, incentives for investment in alternative assets and requirements for assessing climate risk. In Mexico, Amafore authorized 42 international mutual funds to receive investments from AFORES.
  • OECD conducts a study on pension systems in Peru. Its main recommendations are: preserve the PAYGO and individually funded systems, integrating them so that individuals contribute mandatorily to both; subsidize the social security contributions of low-income workers and increase the mandatory contribution rate.

To download this Pensions Progress report, please click on the following link.

See all news
Suscribe to the Fiap International Newsletter Sign up here

Informativo FIAP

FIAP > Boletín – Recientes > Pensions Progress Report No. 5 – 2019 / August-September 2019

Pensions Progress Report No. 5 – 2019 / August-September 2019

16 October, 2019
  • Crisis in PAYGO systems worldwide. In Argentina, the social security deficit is US$ 14,000 million per year, according to the Latin American Economic Research Foundation (FIEL). In Brazil, despite the reform, social security expenditure and the deficit will continue to grow in 2020. Social security expenditure is expected to increase by R$ 51.8 billion compared to this year and the deficit of the public system, the INSS, is expected to be $ 244.2 billion in 2020, 13.5% more than expected this year.
  • In Brazil, the Senate approved the pension reform in the first round of voting. The Senate is expected to consider making amendments to the bill before it is submitted to a second round of voting.
  • In Colombia, the Minister of Labor, Alicia Arango, confirmed that the pension reform, including the Colombia Mayor and Periodic Economic Benefits Plan (BEPS) programs, will be ready by the end of the year.
  • In Peru, the Ministry of Economy and Finance continued assessing the possibility of allocating part of the General Sales Tax (IGV – Value Added Tax) to the pension fund, as part of the measures to formalize the country’s economic activities.
  • In Chile, the Government will modify the formula for calculating the programmed withdrawal interest rate. This rate will now be calculated on the basis of 80% of the interest rate derived from a rate vector and 20% of the average annual rate of return of pension funds C, D and E.
  • Flexibilization of investment options. In Chile, the Pensions Superintendent, Osvaldo Macias, announced some 9 regulatory changes to make the AFP investment regime more flexible. They include: authorize investment in vehicles with gold exposure, incentives for investment in alternative assets and requirements for assessing climate risk. In Mexico, Amafore authorized 42 international mutual funds to receive investments from AFORES.
  • OECD conducts a study on pension systems in Peru. Its main recommendations are: preserve the PAYGO and individually funded systems, integrating them so that individuals contribute mandatorily to both; subsidize the social security contributions of low-income workers and increase the mandatory contribution rate.

To download this Pensions Progress report, please click on the following link.

See all newsletters