Current Status of AFP Retirement Debates
Are there any new updates regarding the AFP retirement? Unfortunately, there is still no scheduled date for a debate about the AFP retirement in Congress. Furthermore, the reconfiguration of the Economy, Banking, Finance, and Financial Intelligence Commission is pending. Previously, this commission was chaired by Ilich López, a congressman from Popular Action.
Despite the stagnation, some relevant developments could influence the future discussion surrounding projects related to the private pension system (SPP). For instance, Popular Action appears to be vying for the presidency of the Economy Commission again, potentially led by either Elvis Vergara or Juan Carlos Mori. Ilich López expresses that their focus remains on “protecting affiliate funds” meant for retirement.
As Congress prepares to define its committees and agenda for this unicameral legislature, dozens of projects aimed at changing the private pension system remain on the table. Out of these, only 19 are seeking to provide access to private pensions through a free AFP retirement for all affiliates.
A Breakdown of Current AFP Retirement Projects
Not all AFP retirement projects presented in Congress offer unrestricted access to funds for all affiliates. In total, Infobae Peru has identified 27 projects that address access to private pension funds.
Among these 27 projects, only 19 advocate for free access for all affiliates, while the remaining proposals come with various conditions, such as the infamous 95.5% withdrawal, which is applicable only at retirement.
Moreover, the amounts promised by these free access projects vary. Some propose a withdrawal amount of 4 UIT (S/21,400), while others suggest a larger withdrawal of 5 UIT (S/26,750), with different delivery methods stipulated in their plans.
This leads us to examine other proposals outside of the AFP free retirement discussions:
- Six projects call for restitution of the AFP retirement of 95.5% upon retirement.
- One project suggests various withdrawal modalities, including 100% withdrawal in case of migration and 95.5% in cases of terminal illness.
- Another project proposes withdrawal liberally each month in case of unemployment, until the total amount is exhausted.
- Additionally, a proposal aims to allow a 40% withdrawal of the AFP account fund under specific conditions.
Currently, there are 19 proposals for Free AFP retirement, aiming to allow all affiliates, regardless of their contribution status, to access their funds.
- Among these, ten projects propose fund access within 120 calendar days, stating that every 30 days after the application is processed, an amount equivalent to 1 ITU (S/ 5,350) will be delivered.
- Only one project details a 95-day delivery framework, proposing to provide 2 UIT (S/10,700) in 40 days and the remaining 2 UIT in 45 days.
- Two projects propose that the 4 UIT be delivered in 90 days via three transactions: the first and second of 1 UIT and the last of 2 UIT.
- Another project aims for access within 75 days, with each payment being 2 UIT — the first two delivered in 30 days and the last two delivered in 45 calendar days.
- Two different proposals suggest that the 4 UIT be delivered within 60 days, distributing 2 UIT every 30 days.
- Another proposal suggests a 60-day timeline but plans on delivering 2.5 UIT every 30 days and includes a special proposal for a maximum delivery of up to 5 UIT (S/26,750).
- Finally, one proposal aims for a 30-day delivery for the 4 UIT, with 2 UIT delivered every 15 calendar days.
- There is also a project that does not specify a delivery timeline for the 4 UIT.
In summary, the debate on AFP retirement remains unresolved amidst numerous proposed projects. Each of these varies significantly in terms of accessibility and the conditions imposed on withdrawal, highlighting the complexity of making substantial updates to the pension system. As discussions evolve, it will be essential to closely monitor which proposals gain traction among lawmakers and how they impact retirees and affiliates across the board.
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