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FIAP > FIAP Newsletter > Progress of the Pension Systems August – September 2016 No. 4

Progress of the Pension Systems August – September 2016 No. 4

21 October, 2016

NEWS HIGHLIGHTS IN THIS ISSUE:

Chile: In August the President of the Republic announced a series of proposals for reforming the pension system. One of them involves increasing the contribution rate by five percentage points (paid by the employer) over a period of 10 years, mainly to finance the solidarity pillar (current pensioners) and a new 4th Collective Savings pillar (future pensioners). Following these announcements, and within the framework of the talks for reaching a national agreement, the Superintendency of Pensions and the AFPs formed a technical panel for discussing some alternatives for improvement, such as: the creation of a “longevity insurance,” resolving the issue of pension anomalies among public employees, reducing social security gaps, the incorporation of self-employed workers into the system, and declared and unpaid contributions. The measures proposed by the Government are still being discussed by academics and the industry, and within the Government itself.
Colombia: All indications are that the pension reform will not be submitted to Congress this year (2016), since issues such as the tax reform and the plebiscite will dominate the legislative agenda and the media until the end of the year. This discussion was supposed to have been held in March this year, since several financial actors had proposed the elimination of the Average Premium Plan (RPM; public PAYGO system) and the strengthening of the private pension funds.
México: The government proposed the creation of Collective Pension Fund Savings Managers (Afores), so that trade unions and trade associations can use the deductions for the benefit of their members (this benefit is currently individual), and generate a culture of voluntary savings in retirement plans.
Perú: The AFP Trade Association announced some of its proposals for improving the system, among them: (i) equal conditions for accessing the minimum pension in the public and private systems; (ii) digitalize the disability assessment procedure in all cases, and also speed up the response in the case of terminal illness; (iii) introduce mechanisms for encouraging competition between the AFPs, in terms of price and the development of new products and services; (iv) establish new mortality tables based on technical studies that truly reflect the current sociodemographic reality of the country; and (v) propose a Longevity Insurance which would cover those people who live beyond ninety years of age, at which there is greater incidence of death.

FIAP Newsletter No. 26

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