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The International Monetary Fund asked to stop early withdrawals from AFP to avoid risks

AFP | Fountain: Andean

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He International Monetary Fund (IMF) asked this Monday to end early withdrawals from AFP affiliates as they could render a private scheme unfeasible, raise the cost of financing for the government, lower national savings and slow down the development of capital markets.

The institution clarified that giving this money to affiliates should be limited to only two exceptions. In this sense, he emphasized that there must always be limits to this process. This is due to the intention of Congress to approve new projects for the withdrawal of funds.

“There should be a moratorium on short-term early withdrawals. Such withdrawals should be limited to a terminal illness and possibly a small amount for housing, excluding unemployment and other not-so-unlikely events. Ceilings should be set for the entire pension system, public and private, such as allowing withdrawals of 80% to 100% for terminal illnesses and one-time cumulative withdrawals of 10% to 20% for housing,” the document says.

They don’t fit the purpose

The IMF also said that the entire Peruvian pension system does not meet the main purpose for which it was created: to protect the elderly from poverty in old age. According to the organization, this is due to the informality of work, the lack of systemic assessment and reform in the ED and AFP.

“In the short term, non-critical early withdrawals should end and lump sums (95.5% withdrawals) should be replaced by regular pension payments. In the medium term, it is likely that the social pension (pension 65) will have to be increased in a fiscally neutral way, as part of the revision of the country’s pension system,” he notes.

MEF warns of new seizures

The Ministry of Economy and Finance (MEF) warns that the seventh withdrawal will mean withdrawing between $22 billion and $25 billion in addition to the money already withdrawn.

Six previous withdrawals of S$88 million have weakened the private pension system, leading to a lack of protection for branches going forward, and will also affect the country’s credit rating, Vice Minister of Economy Juan Pichihua said. .

Source: RPP

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