The profitability of Pension funds recorded a slowdown in its growth. Given the fluctuation in yields and, earlier this year, the decrease in the total balance of contributors’ retirement accounts, Free Journal asked eight questions to the Superintendence of Pensions (sipen) in order to understand the system monitoring process and other concerns.
How often does sipen evaluates the performance of the operations of the Pension funds?
The Superintendence of Pensions supervises daily the operations of the AFPs (Administrators of Pension funds) related to the investment process of the resources of the Pension fundstherefore, we follow up on the return that the investments earn and generate.
What do you think about the poor performance of the funds during this semester?
The return on investments of Pension funds it is variable and depends on the domestic macroeconomic environment and the global economic outlook. Currently, the value of the local currency reflects an appreciation against the dollar, so the proportion of the portfolio that is invested in dollars has a lower value due to the variations that the exchange rate is experiencing. It should be noted that the appreciation of our currency responds to monetary policy measures that are taken for the purpose of controlling inflation.
In another order, the behavior of the Pension funds in the short term it does not represent the performance of this, since pensions must be viewed as long-term products and whose result is evaluated at the time they are granted.
Is this the first time that decreases like this semester’s have been recorded?
This is not the first time this has happened. When there is an increase or decrease in interest rates, the price of the instruments is affected and their value undergoes changes. The difference on this occasion is due to the fact that the current economic environment has had a greater impact.
If yields decrease, does it impact the commission percentage of the AFPs?
Yes. The commission charged by the AFPs is based on the managed balance. If the balance is less, the commission amount is less.
What sanctions could the AFPs face that discount a value greater than what is established as a commission?
The amount corresponding to the commission for balance is supervised on a daily basis by this Superintendency, so the probability that this amount is different from the corresponding one is very low, if not null. In the 19 years of the system, which have elapsed since the beginning of the collection, no fault has been recorded on the matter. In the event of any non-compliance, there is a regulation of sanctions for the purposes.
What actions are you carrying out to regulate that the risk is mitigated?
The Superintendency monitors the variations in the exchange rate on a daily basis and measures have been taken at the regulatory level in order to mitigate any short-term negative impact on the fund portfolios. Likewise, there is regulation regarding investment limits by issuer, instrument and currency, so we remain vigilant that the AFPs comply with them.
Why are there differences between the statistics of the sipen and those of the adafp?
The statistics of the sipen contain the complete information of the entire system while those of adafp (Dominican Association of Administrators of Pension funds) only contemplate the data corresponding to their member entities. Additionally, our statistics present more up-to-date data, so there may be some differences, but they are not significant.
How often should transaction statistics be published?
All system statistics are published monthly and are available on our Web page.
