Congress approves seventh withdrawal of AFP funds without restrictions: Solution or risk for pensions?

The Economy Committee of the Congress of the Republic of Peru approved in an extraordinary session the seventh withdrawal of funds from the AFPs for all affiliates without restrictions, marking a shift from the initial proposal that limited the release of funds to certain specific criteria. With a result of 17 votes in favor and 3 against, the Congress decided to backtrack on its intention to restrict the withdrawal only to those affiliates who did not have their pension contributions credited for a minimum period of six consecutive months until November 31, 2023. The call for the Economy Committee session originally included the debate on the "Law for the Modernization of the Peruvian Pension System," but after a procedural motion presented by Congressman Germán Tacuri from the Magisterial Bloc, it was decided to separate the pension reform project from the fund withdrawal proposals. The newly approved text allows for an optional withdrawal of up to S/ 20,600 for all affiliates of the Private Pension System (SPP), without any exceptions. This withdrawal can be requested physically or virtually within 90 calendar days after the publication and entry into force of the law's regulations. It is established that up to 1 UIT can be received every 30 days, with the first disbursement 30 days after the request is submitted to the AFP. Furthermore, it is considered that an affiliate may choose to refrain from withdrawing the funds on one occasion only, requesting it from the AFP 10 days before the next disbursement. The withdrawn funds maintain their intangible status, and cannot be subject to discounts, seizures, or other forms of impact by judicial or administrative orders. The Superintendence of Banking, Insurance, and AFPs (SBS) will be responsible for establishing the operational procedure within a maximum period of 15 calendar days after the publication of the law. This decision has generated various opinions in Peruvian society, with some celebrating the opportunity to access their pension funds in times of economic crisis, and others expressing concern about the long-term impact on the country's pension system. Undoubtedly, the debate on social security and the future of pensions will continue to be at the center of public discussion.