The following topics are highlighted in this new edition of the Progress of the Pension Systems:
• Crisis in the PAYGO systems worldwide. In Costa Rica, it has been claimed that increasing contributions by 1% will not save the public PAYGO system; it has been proposed, instead, to review Social Security contributions, which represent 38% of workers’ salaries, and make them general taxes, which would help to reduce the cost of formality. In Spain, according to the Association of Collective Investment Agencies and Pension Funds, the public pension replacement rate will be 27% by 2050, versus 82% today. It was also announced that population aging reached a new record, with 8.6 million people over at the age of 65. In Greece, Parliament adopted a series of measures – including the freezing of pensions until 2022 – demanded by creditors within the framework of the second revision of the third bailout. In Nicaragua, according to the IMF, the liquid reserves of the Nicaraguan Social Security Institute (INSS) will be exhausted by 2019, due to which the retirement age, the minimum contribution period, and the contribution rate must be increased, among other measures.
• Peru increased the foreign investment limit. The Central Reserve Bank (BCR) approved the increase of the operative foreign investment limits of the AFPs from 44% to 46% (as of July 17, the limit is 45%, and will rise to 46% on August 17).
