Comprehensive pension reform: Key changes affecting AFP and ONP members

14 votes in favour, 6 votes against and 1 vote abstained, the Economic Commission said. Congress approved the opinion proposing a new law of Pension system in Peru. The initiative seeks more competition AFP To manage the funds of the members, a minimum pension, Pay commissions based on results, a Consumptive pension As a complementary contribution mechanism, a mandatory contribution workers Independent, among others. The proposal is based on three pillars: Non-Contributory, Semi-Contributory, Contributory and Voluntary.

This proposal was one of the last changes included in the opinion and was seriously raised by the bench Popular Force. It is a voluntary contribution for retirement purposes, which is the payment receipts from the consumption expenditure incurred by the members National Identity Document (DNI).

That is, formal workers, unemployed or housewives can make purchases in markets, supermarkets, travel, hotels or others; From this they will get the amount for themselves Pension. Issued payment receipt will be considered for consumption pension Up to a maximum value of S/ 700.

However, the proposal has drawn criticism because it does not benefit the poor as structured. According to the former president of Sunat, Luis Arias Minaya, “Even if the 1% consumes, spends all of your income and buys everything systematically (a heroic assumption), building up a retirement fund is not “even enough for tea”.”

All contributors who recognize at least 240 effective contribution units, whether compulsory or voluntary contributions for temporary purposes during retirement, and who have not withdrawn funds since the coming into force of the Act, are entitled to the minimum pension.

That means pension will be given S/600 for 20 years of contribution and S/400 for orphan and widow pension. Furthermore, this amount shall be renewed every three years upon the request of the Executive Branch and with the approval of Congress. You should also seek technical opinion from supervisors of Banking, Insurance and AFP (SBS) and Finance Council.

The reform plan, which must now be approved Congress PlenaryAllows members of the Office of Pension Normalization (ONP) to issue voluntary conversion recognition bonuses. Administrators of Pension Funds (AFP). At this point, let us recall that the Ministry of Economy has emphasized its opposition because in the ONP distribution system, storage resources are not private.

“Associates with SNP may transfer to SPP at any time as per existing norms, entitled to recognition bonus and accumulated inflation adjustment of contributions made to SNP, which will be transferred to CIC. Respective affiliation”, the comment reads.

According to the MEF, the provision of these bonuses jeopardizes the sustainability of the national pension system, due to its high cost of funding, its The cost will reach S/581 million First year.

Also performs propositional tasks Administrative authority Inclusion of fictitious accounts in ONP’s disbursement regime so that each pensioner can get pension according to what they have contributed. This provision is being implemented gradually in accordance with the provisions of Article 7. “The Office of Normalization of Pensions (ONP) creates notional accounts for its members in which their contributions are recorded,” it said.

to Independent workers Computer subsidiaries deriving income in fourth category or fifth category of income are subject to compulsory contribution rate. The said rate shall be applied gradually commencing on 1st January of the third year after the coming into force of this Act.

In that first year, a rate of 2% will be applied, increasing by one percentage point every two years to a maximum of 5%. The aforesaid rate shall be applied to the income derived from each payment receipt issued by the independent worker.

Since the entry into force of this Act, it is prohibited to withdraw or abnormally withdraw the funds accumulated in the individual accounts of compulsory contributions of the organization while the subsidiaries are active.

Given the high competition for managing funds, the Peruvian pension system has included new financial actors with high profitability. Overall, if this proposal is approved in plenary and executive, apart from the AFP, Banks, savings and loan banks, financial institutions, insurance companies, among others.

“Due to the current regulation, barriers have been created for other financial institutions to compete with the existing AFPs. As is known, according to Article 61 of the Political Constitution of Peru, the Peruvian State is obliged to encourage and promote competition, as well as to combat any practice that restricts competition and the abuse of dominant positions.

Let’s remember that Act 31332 came into effect in 2021 50 years Minimum age for accessing pension scheme for men and women affiliated with Pension Fund Administrators (AFP). Early retirement (Cloud).

A Special Early Retirement System has been established in the Private Pension System for subsidiaries that meet the following conditions for the opinion that they seek to approve in the plenary meeting: a) At the time of claiming the benefit, the minimum age is fifty-five (55) years. That means getting older.

Also, one of the changes set in consideration member Default to the National Pension System (SNP). Every person above the age of 18 must choose the organization (private or public) they wish to join. Those who do not opt ​​for the AFP or ONP system will necessarily join the national system upon reaching adulthood.

On the other hand, the non-contributory pillar includes funeral expenses, and funds for AFP members without heirs are advertised as being transferred to the government.