In the Dominican Republic Nearly 2,000 rooms have been built for the tourism sector with the support of the Pension funds of Dominican employees. These have been built in the National District, Bayahibe, Miches, Punta Cana and Samaná, among other places.
According to Raul Hernandez Baeztechnical director of the Dominican Association of Administrators of Pension funds (adafp), today the Pension funds they are invested, by law and complementary regulations, exclusively in the financial sector and stock market.
“Close to 32,000 families have benefited from the investments of the Pension funds that have been made via investment funds in the tourism sector”, said the executive.
The documents of adafp also explain that the direct and indirect jobs for these investments more than 8,000 jobs.
The Administrators of Pension funds (AFP) invest the Pension funds in financial and securities market instruments with the aim of increasing them to maximize the assets that finance workers’ pensions.
According to the information supplied by the adafpthe long-term objective in the individual capitalization regime means that the members’ resources are a simile of investment portfoliosbut with a single objective.
Hernández Báez recently participated in the V Investment Forum of the Association of Hotels and Tourism of the Dominican Republic (Asonahores), where he indicated that between 2003-2019 the Pension funds they have contributed an average of 22% of the economic growth of the Dominican Republic (1.13% of 5.14%).
In addition, he highlighted that this contribution is enhanced to the extent that the system increases its investments in the real sectorcontributes to business productivity and financial development.
“That support is growing, because to the extent that these funds are invested directly in the private sector, especially through the participation fee of the investment fundsthat contribution, annually, has the vocation to grow”, expressed Hernández Báez.
He explained that this contribution is enhanced to the extent that the system increases its investments in the real sectorcontributes to business productivity and financial development.
It was reported that the Administrators of Pension funds (AFP) members of Adafp (Crecer, Popular, Reservas, Romana and Siembra), according to official figures from September 2022 from the Superintendence of Pensions, manage a heritage of Pension funds for 869,358.2 million pesos, which is equivalent to about 16% of the gross domestic product (GDP).
Investment process of pension funds
The Adafp explained to Free Daily that, with the monthly contribution of employers and workers, and with the increase in returns from previous investments, the AFP reinvests the funds every day.
He pointed out that: “When the contribution arrives, by regulation they have a limit of 24 hours to make that investment, to avoid that the funds remain in unproductive accounts. The funds are invested in accordance with the provisions of Law 87-01 and the complementary regulations”.
He added that the investment process of the Pension funds It is done following the maximum investment limits established by Law 87-01 and the complementary regulations of the Risk Classification Commission and Investment Limits for authorized instruments, both fixed rent as equities, with investment grade quality, that is, they are considered to have a low level of credit risk.
Through a document, the adafp explained that, once the group of eligible institutions and instruments has been defined, each investment committee it invests the liquid or available resources in accordance with an investment policy in which it establishes the amounts that it wishes to invest in the instruments authorized in the market.
Likewise, this seeks to maximize the profitability obtained for the fund, while complying with the investment limits established by law and complementary regulations for the different classes of instruments, by the size of the instrument issue and the size of the managed fund.
In addition to any other additional investment limit established by the administrator (by currency, by economic sectorby term, by asset class, etc.).
Once the investments are made, the briefcase is continually evaluated to buy any instrument available in the market to acquire instruments that offer a better risk-return ratio than any already in the market briefcase.
Where can investment funds be invested?
Article 97 of the Law 87-01 explains that the resources of the pension fund They can only be invested in financial instruments such as term deposits and other titles issued by banking institutions, the National Housing Bank, the National Housing Institute (INVI), and regulated and accredited savings and loan associations.
Also, in letters or mortgage bonds issued by banking institutions, the National Housing Bank, INVI and by regulated and accredited savings and loan associations.
Also in debt titles of public enterprises and private; in publicly offered shares; in credit titles, debts and securities issued or guaranteed by foreign states, central banks, companies and foreign or international banking entities, traded daily in international markets and that comply with the characteristics indicated by the complementary regulations.
Likewise, in titles and securities issued by the National Housing Bank, for the development of a secondary mortgage market; funds for the development of the housing sector, and in any other instrument approved by the National Council of Social Security, prior weighting and recommendation of the Risk Classification Commission.