How much will it cost the state to replace ONP with AFP?

Implement Law Recognition Bonus, the exemption, which will be given to a member of the Office for Standardization of Pensions (ONP) to switch to a private pension system (SPP), will require an investment of SGD 5.800 million from the government in the first year of implementation alone.

Information was provided by the head of the ONP, Victorugo Montoya, who recalled that the aforementioned law would still have a higher fiscal cost in the next stages. “But the total cost of implementing this law in the form in which it was approved will be 40 billion soles,” he said.

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Montoya recalled that the Appreciation Bond was approved when the private pension system was set up, and this created a need; however, now “remarks made to the autograph of the law are not taken into account.”

In addition, he said that they could file a lawsuit in the Constitutional Court to declare unconstitutional the law, which was approved at the urging of Congress.

He said that although he coordinates with Ministry of Economy and Finance (MEF), the decision must be approved by the Council of Ministers; While this is being assessed, “we are obliged to do this, like any other public sector entity, to comply with the norm,” he specified.

How will this affect the state treasury?

Montoya commented that this appreciation bond would put more pressure on the tax treasury given that pension payments in the national system are 5,000 million sols per year and that only 3,800 million sols are funded by monthly contributions. “The deficit is covered by the State Treasury at the expense of the structure of operating models.”

This would mean, he added, that any payment on the recognition bond would come entirely from the State Treasury. “It will have a total cost of 40 billion soles, and in the first year alone it will be 5.8 billion soles.