Changes in proposal to withdraw funds from AFPs spark controversy in the Peruvian Congress

The Economy Committee of the Peruvian Congress has once again modified its proposal for the withdrawal of funds from the AFPs, limiting access to a maximum of four UIT (20,600 soles) for affiliates who have not made contributions for six consecutive months until November 2023. This decision represents a change from the original proposal which allowed a withdrawal of up to two UIT for those who had not contributed for 12 consecutive months. Previously, there had been discussions about allowing a four UIT withdrawal for all affiliates, without restrictions, which would have meant a withdrawal of 29,000 million soles from the private pension system, causing significant distortions in the AFP funds and financial markets. With the new limited proposal, it is estimated that approximately 6,000 million soles, equivalent to 5% of the funds managed by the AFPs, would be withdrawn. Despite being a smaller amount compared to the initial proposal, some experts like the CEO of AFP Integra, Aldo Ferrini, believe that restricting withdrawals only to unemployed affiliates is detrimental to the pension system and goes against the efforts of a comprehensive reform being discussed in the Legislature. Ferrini projects that around 1.5 million AFP Integra affiliates could take advantage of this withdrawal possibility, a number that would increase to three million considering the entire system. However, there are congressmen advocating for an unrestricted withdrawal of four UIT, which concerns experts like Ferrini, who argue that this measure would affect economic growth by reducing the country's savings. The CEO of AFP Integra urges lawmakers to prioritize the debate on the overall pension system reform, with the aim of establishing a minimum pension, increasing competition, and beginning to rebuild the pension savings that have been diminished in recent years. Despite his reservations about extraordinary withdrawals, Ferrini acknowledges that the current proposal from the Economy Committee is more refined than the previous one, although there are still contradictory elements that need to be carefully analyzed. Amidst these discussions, it is expected that people's purchasing power will recover in the second semester, while figures like former president Pedro Pablo Kuczynski criticize the high commissions of the AFPs and propose retaining a higher contribution rate to the system. In summary, the debate on the seventh withdrawal of funds from the AFPs continues to generate tensions and differing opinions in the Peruvian Congress, with direct repercussions on the pension system and the country's economy.