Background on the Situation
The Peruvian Congress has approved an eighth partial withdrawal of private savings for pensions, amounting to up to $7.5 billion, a move that could leave millions without retirement funds according to analysts.
Key Details of the Approval
- The withdrawal was approved by a wide majority in Congress on Wednesday night and is expected to be promulgated by the Government following President Dina Boluarte’s previous support.
- Economy Minister Raúl Pérez Reyes stated at the beginning of the week that another withdrawal from savings would imply the exit of approximately 26.32 billion Peruvian soles from the private pension system, equivalent to 22.7% of the total amount managed by pension companies in the country.
- The four private pension fund companies currently administer around 118 billion Peruvian soles from approximately 10.1 million affiliated individuals, according to regulatory data.
Impact of the Withdrawal
With the approved measure in Congress, each affiliated individual to the private pension system can withdraw up to 21,400 Peruvian soles (approximately $6,000) from their retirement fund.
Pension withdrawals began in 2020 as an exceptional measure to mitigate the impact of the pandemic. However, analysts argue that successive withdrawals have affected the stability of the private pension saving system, which was established in 1993.
Minister Pérez Reyes warned that if affiliated individuals release their savings, 8.6 million people contributing to the private pension system could be left without funds for their retirement, including 2.3 million affected by previous withdrawals.
Key Questions and Answers
- What is the main issue at hand? The Peruvian Congress has approved an eighth withdrawal of private pension savings, which could leave millions without retirement funds.
- Why are analysts concerned about this move? Successive withdrawals have affected the stability of Peru’s private pension saving system, originally established in 1993.
- How much will individuals be allowed to withdraw? Each affiliated individual can withdraw up to 21,400 Peruvian soles (approximately $6,000) from their retirement fund.
- How many people could be impacted by this decision? Minister Pérez Reyes estimates that 8.6 million people contributing to the private pension system could be left without funds for their retirement, including 2.3 million affected by previous withdrawals.
