Tue. Jul 16th, 2019

The AFPs stand up to fight against "populism" in Latin America



The pension fund administrators (AFP) rejected any "populist" measure that affects the previsual purpose of their funds in Latin America and asked that the reform of the amount of contributions be considered in the face of the "great challenges" that demographic changes imply in the world.

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This position was exposed this Friday during a conference held in Lima by the International Federation of Pension Fund Administrators (FIAP), which issued the "Lima Agreement" on the occasion of the 25 years of the private pension system in Peru.

FIAP expressed concern that "sometimes" the pension system is transformed "into a favorable field for populism" and warned that the consequences "will see future generations, when they are no longer those who obtained the revenue of the measure, nor those responsible for its adoption. "

"Therefore, we urge those responsible for public policy in our countries to promote that all processes of change are framed within the margins of a technical discussion that ensures as a single objective, the sustainable improvement of pensions," he said.

In the meeting of the FIAP participated, among others, the Chilean Guillermo Arthur, president of the organization; the Uruguayan Luis Costa, president of the AFAP Republic; the Chilean Patricio Góngora, communication manager of AAFP, and the Peruvian Giovanna Prialé, president of the Association of AFP of Peru.

Arthur told Efe that the agreement "talks about the great challenges that pension systems have", especially because the demographic changes that occur in the world "impose the obligation to finance an increasingly long period of life for others. "

Faced with this scenario, he added, "the distribution systems are no longer viable" and the countries of Europe "are each day strengthening more capitalization mechanisms", which is why nations such as Peru, Chile, Colombia and Mexico face the need to increase the saving.

The president of FIAP considered that he has to think "to create a higher price", because the current 10% "is clearly insufficient and must be said clearly".

"The other thing we insist on is that all the reform processes are done with a single purpose: to improve the pensions of the workers, and to banish populist ideas, because populist ideas are very attractive in the short term, but in the long run they go to produce great frustration, "he said.

Prialé stressed, in turn, that the private pension system in Peru has advanced "despite the difficulties" and already has about 80,000 retired pensioners, but added that it must "begin to attack and combat" the high informality and illegality , since 7 out of 10 people do not make contributions.

Among the difficulties mentioned, especially, the enactment of a law that allows, since 2016, that workers withdraw 95.5% of their funds, a measure that, he said, has led to Peru becoming "the black sheep "of the pension system.

"I think it is not even populism in the open sense of letting you spend money, but rather it is an easy populism, in which the State does not assume any role as a provider of social security, because it allows low-income people to spend what little saved instead of complementing, as in other parts of the world, so that it is entitled to a minimum pension, "he said.

Prialé added that, for that reason, the Peruvian authorities should evaluate to what extent the approved law "has to be reversed."

In the "Lima Agreement", the AFPs also committed to promote investment in projects that increase economic well-being and savings, and to promote the creation of a legal and regulatory framework that "respects the certainty and development of pensions and the rights and benefits acquired by members are preserved ".

FIAP has full partners from Chile, Spain, Mexico, Colombia, Bolivia, Costa Rica, El Salvador, Ukraine, Kazakhstan, the Dominican Republic, Uruguay and Peru, as well as 14 other "collaborating" partners.

Its partners bring together 110 million pensioners and pensioners, who own funds equivalent to 570,000 million dollars, 70% of which correspond to the profitability of the investment in "more mature" systems.

David Blanco Bonilla

(tagsToTranslate) AFP (t) put (t) fight (t) populism (t) Latin America



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