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FIAP > Boletín – Recientes > Progress of the Pension Systems No. 3 – 2021 / April-May 2021
22 June, 2021

Progress of the Pension Systems No. 3 – 2021 / April-May 2021

In this edition of the Progress of the Pension Systems, we highlight the following news:

  • Crisis in the PAYGO pension systems in the world. In Argentina, according to a report from the Entre Ríos Business Council (CEER), in 2020 the province’s total retirement and pension expenditure represented 22% of total public resources. In addition, according to data from the Social Security Statistical Bulletin, in March 2021, more than half of the retirees had to resort to moratoriums for not having 30 years of contributions. In Costa Rica, data from the National Institute of Statistics and Censuses show that 2020 saw the largest drop in births in 70 years. It is also estimated that in 2050 there will be only 2 active workers for each pensioner. For its part, in Ecuador, the World Bank presents a study that shows that by 2022 the Ecuadorian Social Security Institute (IESS) will not be able to pay retiree pensions. In Panama, the Director of the Social Security Fund (CSS) points out that by 2025 it is projected that there will be a cash shortage of USD 646.2 million.
  • Germany: Government advisory panel of experts recommended that the country’s retirement age be raised to 68 years. A report was released warning of “steeply growing financial problems” for the pension system starting in 2025.
  • Costa Rica: The CCSS announced the main measures that are to be applied for the Disability, Old Age and Death Pension Scheme (IVM, pay-as-you-go scheme). The following reforms are proposed: (i) Gradually eliminate the anticipated pension for 2029; (ii) Changes in the additional amount to reduce the increase in the percentage of the pension; and (iii) Modification in the calculation of the average reference salary.
  • Peru: Superintendency of Banking, Insurance and AFP (SBS) approved a series of provisions on the investment regime of pension funds. The standard incorporates as new eligible investment alternatives for pension funds private debt strategies and joint ventures within the alternative asset class and enables greater investment in variable income instruments in the local market, through of Exchange Traded Funds (ETFs).
  • South Africa: New rules are in place, requiring certain members of occupational provident funds to annualize at least two-thirds of their account balances upon retirement (that is, they are forced to buy an annuity with at least 2/3 of funds); previously the entire balance could be withdrawn as a lump sum.

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