The Banking Superintendence, Insurance and AFP (SBS) published the regulatory project that opens the court so that new actors, such as financial system companies and insurance companies, can compete with the AFP in the pension fund management business. The proposed regulation is part of the Modernization Law of the Peruvian pension system.
The objective of the initiative is that the competition between AFP, banks, financial, municipal boxes, rural boxes, investment banks and insurance companies, translates into more competitive administration commissions and, “above all, in a substantial improvement of the quality of products and services provided to affiliates, beneficiaries and pensioners.”
“A more competitive market means one with greater dynamism, adaptability and better conditions for users, always with a sustainability approach,” said Sergio Espinosa, head of the SBS.
Reactions
The news was seen with good eyes by the actors. Already in an interview conducted by Peru21 to the General Manager of Interseguro, Gonzalo Basadre, the Executive had been in favor of the insurer to participate as a pension fund manager.
The president of the Federation of Municipal Savings and Credit Funds (FEPCMAC), Jorge Solís, told this newspaper that the measure is a “good news.” He said that the SBS guidelines to encourage competition in a system that has been experiencing problems are positive. However, he was against the Pension Modernization Law because, in his opinion, it has a series of gaps that make it vulnerable to the political interest of the congressmen.
The former head of the SBS, Juan José Marthans, said that the SBS proposal is welcome and that no one should oppose. He added that if doubts could arise if the measure would attract more actors due to the size of the funds (in allusion to the withdrawals), it is better to let the market decide.
“Here what we are going to measure in the competition is efficiencies. To minimize costs, a mechanism such as AFPnet should be sought (which the four AFP currently share to affiliate and capture the contributions of the affiliates) to be used by the entire system. If the AFPNET cannot share it to the new actors, then it is believed to be parallel,” he said.
The project establishes a series of requirements to safeguard pension savings. Among them are the patrimonial order, financial strength and adequate risk management. For example, only those companies that prove a classification of risk not less than B+may participate.
Technical team
Also, in the search to provide greater predictability to the pension industry, the head of the SBS announced before the Congress the creation of a technical team to develop a comprehensive study on pension systems in Peru.
According to Espinosa, the objective is to evaluate the improvements required by the various pension systems that exist in the country in order to provide sustainability over time, increase coverage and that the population can identify the benefits of their affiliation.
“We hope that this work group (of the SBS) issues a technical report that will later be sent to Congress, MEF and BCR for discussion,” said Espinosa.
The head of the SBS also manifested about the withdrawals of funds and pointed out that these have generated that the accumulated savings for pensions in the private system are reduced from 25% to 10% of GDP. He emphasized that this situation not only affects investments, but also the financing of the retirement of Peruvians.
The cast system no longer gives
The president of the Central Reserve Bank (BCR), Julio Velarde, said that the distribution modality manages the ONP already expired.
“There has to be a pension system, that is indispensable, and the truth is that the best system for a population that will be decreasing is the individual accounts. The cast system no longer gives. The distribution system arose in the nineteenth century, when there were many young people and few older; now it is the other way around,” he said before Congress.
He stressed the importance of contributing for retirement, since in Peru there is no savings culture. He added that, when that money is used to open a business, it is often overlooked that half of the small businesses break before they turn five years.
“How did the retirement affected the market? We have the Treasury Bonus that reached 5.7%. It was announced that there would be new withdrawals and the rate rose to 5.9%. The 10 -year bonus rate is the reference for mortgages. Why am I going to lend ‘Juan Pérez’ for a mortgage, if I can buy a bond at that rate? The bono fixes the floor for the mortgage rate. long -term companies;
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