PERU - President Alan García Pérez yesterday passed a new law, ‘la Ley de la Libre Desafiliación de las AFP', which will enable Peruvians previously registered in the private pension system (SPP) to switch back to the state pension system (SNP).
The law will also guarantee SPP members a minimum monthly pension of S/415 (around US$130).
Peru is one of 28 countries worldwide to have adopted a pensions system based on the Chilean model of mandated pension programs based on individual capitalisation. The SPP, which is worth an estimated US$15bn, currently has 3.9 million members and is controlled by four pension administration firms (AFPs).
However, it has been alleged that when Peru adopted the AFP model in the mid-1990s, under the stewardship of the then president, Alberto Fujimori, many people were “badly-advised or badly-informed” and encouraged to join the SPP, when in fact they would have got a better pension in the SNP.
Going forward, there will be a mandatory three-month ‘information period’ for employees, so that they can be certain they are making the right choice when deciding between the SNP and the SPP.
In a lavish ceremony at the presidential palace in Lima, García said the government was “fulfilling an act of social justice” in passing the new law.
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