Peru AFP Watch: Tender decision, funds withdrawal bill
Colombian financial services giant Sura's Peruvian private pension fund manager, AFP Integra, won a contract to accept new workers entering the pension system for two years starting June 2019.
Integra, one of three AFPs that bid, proposed a commission on fund balance of 0.82% and a commission on gross monthly salary of 0%, watchdog SBS said in a Tweet.
Integra's offer was lower than that of the local unit of Chile's AFP Habitat (0.90% and 0%) and AFP Prima (1.00% and 0%), which is part of local financial services group Credicorp.
Peru's other AFP, ProFuturo, did not bid.
SBS's deputy AFP unit chief, Jorge Mogrovejo, said in a tweet: "This is great news for new members of the private pension system. It has demonstrated that competition helps drive down costs for the benefit of members."
The contract to accept new members is currently held by Prima, which charges a commission on fund balance of 1.25% and a commission on salary of 0.18%. Integra charges 1.20% and 0.90%, respectively.
In Peru, workers contribute 10% of their monthly salaries to their pensions and also pay 1.36% of their gross monthly salary for an associated insurance policy.
There had been talk that a new player would seek to enter the AFP fray this year via the tendering process.
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A Peruvian lawmaker who this year submitted a bill that further relaxes the country's pension freedom rules has urged congress to approve it.
In May 2016, SBS gave AFP members the authorization to withdraw, on retirement, up to 95.5% of their funds. The announcement followed approval the previous month of a controversial pension reform bill.
Justiniano Apaza wants lawmakers to give the green light to draft legislation that allows AFP members who are aged over 40 and have been unemployed for more than 12 months to withdraw their pension savings.
Within the AFP system there are 2.5mn members - 35% of total members - who have not paid into their AFP account for more than a year, Apaza said in a statement issued by congress, citing SBS data.
Many of the pension pots of those who have stopped contributing do not contain enough funds to pay for a decent pension, he said. Thirty-one percent of pensions in the private system are under 415 soles (US$123), he said, adding that around 100 members receive a pension of less than 10 soles.
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