Julio Velarde: President of the BCR supports making contributions to AFPs mandatory and in private accounts

Julio Velarde Expressed his stand on the debate on pension reform. Also, he felt that the current rate of contribution (10%) was insufficient compared to other countries.

Governor of Central Reserve Bank (BCR), Julio VelardeIn AFPs the existence of a form of personal accounts and the fact that people's contributions are mandatory, but not voluntary, are considered in favor.

“Pensions can be compulsory or voluntary. Countries make them compulsory because people don't save voluntarily, and even if they do save, it ends up in bad investments: my little son studied to be a chef, and we have to build his restaurant and his father's. That's where the savings end up, and they stay poor.” When asked about the reform of the pension system, the official said.

Julio Velarde He argued that the private contribution system continues Personal accounts Unlike all contributions that go to the general fund.

“Even in countries where such a distribution system exists Sweden, Netherlands oh Germany They are now discussing being on personal accounts. The advantage of a personal account is that it does not reimburse the budget. If we live for 140 years and we cannot achieve what we have, or we have to work harder, but it is difficult. In principle they should be individual accounts, which I believe is the best system and mandatory, and then they are almost details,” he added.

The official pointed out that the contribution rates are comparable to Chile and European countriesHis pension system is more than 15%, while in Peru the percentage is 10%.

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“Maybe 10% is too low, as in Chile, because life expectancy continues to grow. In Chile they raise it to 15%, in Europe they usually exceed 15%, here we contribute 10%, but it is a process and has to be changed little by little. That plan is essential,” he said.

In the case of the ONP, Velarde proposed that they should also be personal accounts, but noted that “since there is no money, they are virtual accounts, that is, national accounts with yields on treasury bonds.”

Yesterday Julio Velarde gave the first inflation report of 2024 in Peru.

Funds are no longer refundable

On the other hand, Julio Velarde He is against the release of AFP funds, which, if implemented, will affect future pensions.

“This is a pension system, pension is for old people. Everyone ages, make sure of that. I don't know any serious people except a few extreme liberals, but almost everyone believes that the pension system should be maintained. And pensions are very low, which means pensions will be even lower,” he revealed.


Jaime ReischThe vice chairman of Moody's sovereign risk group said fresh withdrawals from pension funds will accelerate consumption slightly and is not alarming in the short term, but he sees it as worrying in the long term.

“The economic impact is not so dangerous in the short term. In the long term it is disastrous, of course, because savings for old age are consumed. And the impact of the deficit is actually negative because it takes resources away from institutional investors, namely AFPs, who can continue to borrow and demand government debt,” he said.

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For its part, Theodore ChrysologusFrom IPE, he warned of the fact that many people are going to reach old age without a pension.

“The fact that many people are going to reach old age without a pension or without funds in their personal capital accounts also creates a financial contingency for the state, which, perhaps, we have not yet fully dimensioned, but at some point we may take it. The fee is obviously, it can revive the economy in the short term, but at the cost of mortgaging the future. .“This is very bad economic and public policy,” he pointed out.

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