AFP Modelo to operate via La Araucana

Tuesday, June 22, 2010

Chile's new private pension fund manager AFP Modelo is in final talks to sign an MOA with lender and social security institution Caja de Compensacion La Araucana, which will allow AFP Modelo to use La Araucana's nationwide 50-branch network, local financial daily Diario Financiero reported.

AFP Modelo - owned by the controllers of local systems integrator Sonda - will compete with the five existing AFPs, and its strategy is to gain affiliates through offering low commissions.

Under the terms of the public tender for new affiliates entering the pension system which was won last February by AFP Modelo, the new AFP could attend affiliates at its own offices or those subcontracting to a second party.

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Chile's pension regulator SP said that the new AFP must have at least one office in the country, following the Chilean law that created the private pension system in 1980, the daily said.

AFP Modelo is slated to start operating in July or August.