New Legislative Proposals for AFP Retirement in Peru: what You Need to Know
Table of Contents
In a significant advancement, Peru’s Congress is considering a new bill aimed at allowing contributors to access their AFP funds under various conditions. This legislative proposal,authored by Congresswoman Worthy Street of Podemos peru,seeks to provide relief to those facing terminal illnesses,unemployment,and other challenging circumstances. Let’s delve into the details of this proposal and the expert opinions surrounding it.
Key Provisions of the Bill
The proposed bill includes several provisions designed to offer financial assistance to contributors in need:
- Housing Purchase: Affiliates of the Provisional Pension System (SPP) can withdraw up to 25% of their fund to pay the initial fee for a single urban property if it is a mortgage loan granted by a financial entity or savings and credit cooperative.This also applies to contributors who need to amortize a mortgage loan for the same purpose.
- Unemployment Benefits: Those who are unemployed for more than 60 days and are under 55 years old can access 50% of their fund.
- Higher Education: Contributors can use their funds to pay for higher education, either for themselves, their children, spouses, or cohabiting partners, in any national or foreign educational institution.
- International Migration: Those wishing to migrate abroad permanently can request the return of 100% of their fund.
- Terminal Illness: Contributors suffering from terminal diseases or diagnosed with cancer can request early retirement and dispose of 95.5% of their accumulated fund.
Expert Opinions
The proposed bill has sparked a range of opinions from experts in the field. Víctor Fuentes, an economist at the Peruvian Institute of Economics (IPE), criticizes these proposals as “populist and anti-technic.” He warns that affiliates have already depleted their pension accounts with the seventh withdrawal in 2024. Consequently, those with funds available to withdraw would primarily be higher-income individuals or those with higher levels of formality.
Fuentes further explains that draining pension funds will have a high economic cost, which all Peruvians will bear due to the short-sightedness of some congressmen. According to the Central Bank, an affiliate who exhausts their funds and reconstructs it again by contributing six times a year could reach a pension equivalent to 20% of their last salary.
Labor lawyer juan Valera also disagrees with the AFP retirement proposal. He argues that many peopel have already run out of funds for their pensions, and future retirees without sufficient funds will face significant challenges. Valera also points out that the measure does not benefit 100% of the population. While some may have the opportunity to withdraw funds, many will have a low amount of AFP or none at all, rendering the desired effect ineffective.
Summary of Key Points
Here’s a summary table to help break down the key provisions and expert opinions:
| Condition | Proposed Withdrawal Percentage |
|————————————|——————————-|
| Housing Purchase | 25% |
| Unemployment (under 55) | 50% |
| Higher Education | Not specified |
| International Migration | 100% |
| Terminal Illness | 95.5% |
Conclusion
The new legislative proposal for AFP retirement in Peru aims to provide much-needed financial relief to contributors under various conditions. Though, experts caution that these measures could have significant long-term economic implications. As the debate continues,it is crucial for policymakers to balance the immediate needs of the population with the sustainability of the pension system.
For more details,you can refer to the original article.
Stay tuned for further updates on this developing story.
New Legislative Proposals for AFP Retirement in Peru: what You Need to Know
In a significant advancement, Peru’s Congress is considering a new bill aimed at allowing contributors to access their AFP funds under various conditions. This legislative proposal, authored by Congresswoman Worthy Street of Podemos Peru, seeks to provide relief to those facing terminal illnesses, unemployment, and other challenging circumstances. Let’s delve into the details of this proposal and the expert opinions surrounding it.
Interview with Dr. Maria Garcia, Pension System Specialist
Key Provisions of the Bill
Q: Coudl you explain the main provisions of the new legislative proposal for AFP retirement in Peru?
Maria Garcia: The proposed bill includes several provisions designed to offer financial assistance to contributors in need. As a notable exmaple, affiliates of the Provisional Pension System (SPP) can withdraw up to 25% of their fund to pay the initial fee for a single urban property if it is indeed a mortgage loan granted by a financial entity or savings and credit cooperative. This also applies to contributors who need to amortize a mortgage loan for the same purpose.
Additionally, those who are unemployed for more than 60 days and are under 55 years old can access 50% of their fund. Contributors can also use their funds to pay for higher education, either for themselves, their children, spouses, or cohabiting partners, in any national or foreign educational institution. Those wishing to migrate abroad permanently can request the return of 100% of their fund.Lastly, contributors suffering from terminal diseases or diagnosed with cancer can request early retirement and dispose of 95.5% of their accumulated fund.
Expert Opinions
Q: What are the expert opinions on this proposed bill?
Maria Garcia: The proposed bill has sparked a range of opinions from experts in the field. Víctor Fuentes, an economist at the Peruvian Institute of Economics (IPE), criticizes these proposals as “populist and anti-technic.” He warns that affiliates have already depleted their pension accounts with the seventh withdrawal in 2024. Consequently, those with funds available to withdraw would primarily be higher-income individuals or those with higher levels of formality.
Fuentes further explains that draining pension funds will have a high economic cost, which all Peruvians will bear due to the short-sightedness of some congressmen. According to the Central Bank, an affiliate who exhausts their funds and reconstructs it again by contributing six times a year could reach a pension equivalent to 20% of their last salary.
Labor lawyer Juan Valera also disagrees with the AFP retirement proposal.he argues that many people have already run out of funds for their pensions, and future retirees without sufficient funds will face significant challenges. Valera also points out that the measure does not benefit 100% of the population. While some may have the opportunity to withdraw funds, many will have a low amount of AFP or none at all, rendering the desired effect ineffective.
Summary of Key Points
Q: Can you summarize the key provisions and expert opinions in a table?
Maria Garcia:
| Condition | Proposed Withdrawal Percentage |
|---|---|
| Housing Purchase | 25% |
| Unemployment (under 55) | 50% |
| Higher Education | Not specified |
| International Migration | 100% |
| Terminal Illness | 95.5% |
Conclusion
Q: What are your final thoughts on this new legislative proposal?
Maria garcia: The new legislative proposal for AFP retirement in Peru aims to provide much-needed financial relief to contributors under various conditions. Though, experts caution that these measures could have significant long-term economic implications. As the debate continues, it is crucial for policymakers to balance the immediate needs of the population with the sustainability of the pension system.
For more details, you can refer to the original article.
Stay tuned for further updates on this developing story.
