According to the approved text, all affiliates, without any exception, are authorized to make the extraordinary and optional withdrawal of part of their funds accumulated in their individual capitalization accounts.

In the afternoon of Thursday, the plenary session of the Congress of the Republic of Peru approved to authorize all members of the Private Pension System (SPP) the optional withdrawal of up to four tax units (UIT), equivalent to S/ 20,600 ( just over US$ 5,450), of their funds in the Pension Fund Administrators (AFP).

The ruling that allows the seventh withdrawal of funds in the AFP was approved in the first vote by 97 votes in favor, 5 votes against and 5 abstentions. The plenary session of the national representation also agreed to exempt him from the second voting process.

The withdrawal of up to 4 UITs from AFP funds was approved after an extensive debate that began this morning and after an intermission and a previous question.

The Fuerza Popular bench requested the fourth interim so that the proposal to release funds of up to S/20,600 be evaluated in a joint opinion with the reform of the Peruvian pension system. Following this request, the plenary session was suspended until 3:00 p.m.

Subsequently, congressmen José Luna and Guido Bellido presented a preliminary question to vote separately on the withdrawal of the 4 UITs from the AFP and the pension reform.

WITHDRAWAL WITHOUT EXCEPTION

According to the approved substitute text, all affiliates, without any exception, are authorized to make the extraordinary and optional withdrawal of part of their funds accumulated in their individual capitalization accounts.

"The purpose of this law is to authorize in an extraordinary manner to all members of the Private Pension Fund System, without exception, the optional withdrawal of their funds accumulated in individual capitalization accounts, up to the amount of four (4) units taxes (UIT)”, specifies the approved opinion.

After the approval of the legislative proposal, the signature of the law must be prepared and sent to the Executive Branch, which has a period of up to 15 business days to promulgate or observe the rule.

THE AFP RELEASES

In a lengthy statement, the International Federation of AFP (FIAP) stressed that "early withdrawals of funds should always be the last option. Institutions such as the OECD and countless other organizations and experts have recommended that these funds should not be used to purposes other than pensions and in case of emergencies".

In an extensive document signed by Guillermo Arthur, President of FIAP, Giovanna Prialé, President of the Association of Private Pension Fund Administrators of Peru and the President of the Association of Collective Investment Institutions and Pension Funds, INVERCO, Spain, together with the President of the Association of AFPs of Chile, the association pointed out that the approved withdrawals have left a large number of people with a zero balance in their accounts, and that the new withdrawals that are proposed will have an impact on an increasingly small number of people, neglecting thus to the most unprotected.

According to the entity's public statement, the withdrawals negatively and directly impact the conditions of thousands of low-income workers, causing inflation, deterioration of the labor market, increased costs of all types of credit, less access to housing, greater financial burden on society, and greater fiscal pressure, which can reduce resources for financing social programs.

"The withdrawal of pension funds generates greater fiscal spending on non-contributory or solidarity pensions, which, together with the increase in the interest rate, which also affects the service of public debt, reduces the amount
of resources available to finance social programs that help the most vulnerable," the statement states.

It is also indicated that with the repeated withdrawal of funds the virtuous circle that the capitalization system has generated in the economy is broken, since the accumulation of pension funds in the individual capitalization systems of our countries contributed to greater annual growth of the GDP between 6% and 22%.

"In conclusion, withdrawals without any targeting (and even if they are limited), by generating a lack of savings, not only exacerbate the problem of workers' pensions, but also generate a destabilization of the economies of the countries that implement them, increasing the inflation and putting the most dispossessed in a worse situation," concludes the FIAP public statement.