FIAP > Boletín – Recientes > Progress of the Pension Systems No. 2 – 2020 February – March 2020
17 April, 2020
Progress of the Pension Systems No. 2 – 2020 February – March 2020
Crisis in PAYGO systems worldwide. In Argentina, the Government once again financed itself with ANSES funds comprising treasury bills for more than USD 260 million. In Spain, expenditure on contributory pensions set a new record in March, amounting to EUR 9,878 million. In Uruguay, a projection by the Social Security Bank (BPS) revealed that state assistance to the Bank will increase from 1.18% of GDP in 2035 to 2.8% of GDP by 2075, for it to be able to pay medium and long-term pensions.
Population aging. CELADE- The Population Division of ECLAC published the 2019 edition of the Demographic Observatory of Latin America and the Caribbean: Population Projections: Population Projections. The Latin American and Caribbean region as a whole is at a relatively advanced stage in terms of aging, and the 60-and-over population is expected to surpass the under-15 population by 2040.
Chile: The new “Employment Protection Law” approves the use of the Unemployment Insurance to pay salaries and avoid the termination of the employment relationship due to the Covid-19 crisis. The remote or “Telework” Law, which will encourage the creation of new jobs and formalize this way of working, was also passed in the midst of the crisis. The Association of AFPs (AAFP), in turn, proposed creating a new instrument for the pension funds to be able to invest in small and medium-sized enterprises (SMEs), providing them with liquidity, protecting employment, and helping to improve returns on funds. Finally, the Pension Commission deems it reasonable to create a new Multifund to provide full protection to workers about to retire.
The Dominican Republic: The Subsidized Regime of the Dominican Social Security System became operational after the granting of 932 solidarity pensions by decree. The monthly solidarity pension is equivalent to 60% of the minimum public sector salary (approx. USD 111).
Egypt: Changes to the public pension system were approved, including: the gradual increase in the total contribution rate (from 21% to 26% by 2055); the gradual increase in the retirement age from 60 to 65 by 2040; the increase in the number of months of contribution required to access an old-age pension (from 120 to 180 months by 2025) and the change in the benefit formula (now the average income over an entire working life is used, instead of the last 2 years of wages).
