Controversy over possible seventh withdrawal of pension funds: temporary relief or long-term risk?

The recent debate in the Congress of the Republic regarding the possibility of a seventh withdrawal of funds from the Private Pension System (SPP) has generated great controversy and concern among experts and the general population. According to information provided by the Superintendence of Banking, Insurance, and AFPs (SBS), if this measure is approved, it is estimated that a total of 8.3 million active affiliates, representing approximately nine out of every 10 contributors registered in the system, would be left without a penny in their pension funds. While the proposal to allow a new withdrawal of up to 4 UIT could mean economic relief for many Peruvians in the midst of the crisis caused by the pandemic, the long-term repercussions could be devastating. Experts like Aldo Ferrini, general manager of AFP Integra, warn that this measure would mainly affect young people who have recently entered the formal labor market, who would have to start rebuilding their retirement savings from scratch. Additionally, it is noted that a significant portion of the withdrawn funds would go to a small percentage of affiliates with higher incomes, creating inequality in the distribution of resources. Furthermore, the sale of assets by AFPs to meet these withdrawals could imply lower prices than expected, affecting both those who withdraw and those who decide to keep their savings in the system. On the other hand, there is concern about the possible divestment of part of the AFPs' portfolio and the decrease in expected returns for affiliates who continue to save in the system. Juan José Marthans, director of Economics at the PAD of the University of Piura, emphasizes that this measure would not only harm affiliates in the long term but also have an impact on the sustainability of the pension system and the country's financing costs. In response to this situation, various experts have expressed their disagreement with the approval of a new withdrawal of funds and have urged Congress to prioritize the discussion on a comprehensive reform of the pension system. They consider it essential to strengthen the Peruvian pension system and ensure the protection of citizens' retirement savings. In the midst of this scenario, Congressman José Luna Gálvez has announced that priority will be given to the recently approved withdrawal opinion, which promises to generate intense debate in the Plenary of Congress. Meanwhile, uncertainty and concern about the future of pensions in the country continue to grow, highlighting the urgency of a comprehensive reform that ensures the sustainability and equity of the pension system in Peru.