Peru authorizes new withdrawal of pension funds due to pandemic

Peru authorized a new withdrawal of money from private pension funds to help the families economically affected by the pandemic and price increases, according to a law published this Saturday by the official gazette.

The law will benefit eight million members of the Private Pension Fund Administration System who will be able to withdraw up to 18,400 soles (4,800 dollars), the government announced.

“With this decision we want to alleviate the economy of thousands of Peruvians who have fundamental needs to cover in health, education, food; or they have debts and other obligations to pay,” Peru’s leftist president, Pedro Castillo, said Friday night.

Members have 90 days to request your moneydetails the standard.

This is the sixth withdrawal of pension funds since the pandemic began, in March 2020. The total withdrawn amounts to about 65,923 million soles (about 17,817 million dollars).

Congress had proposed and approved the rule on May 4, promoted by leftist and right-wing legislators.

With the new withdrawal, another 30,000 million soles (about 8,100 million dollars) would come out of the pension accounts, according to the Association of the Association of Pension Funds, which rejected the project.

“It is pure demagoguery, because there is no reason to do so. The levels of production and employment are now higher than March 2020,” the spokesman for the AFP Association, Joaquín Rey, said recently.

He warned that these measures will have a negative impact, because “the pension savings is for the future“. In addition, the increase in liquidity in the economy will stimulate inflationary pressures.

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Peru experienced violent days of protests in April in rejection of food and fuel price hikes.

Inflation now reaches figures not seen in more than two decades, 1.48% in March and 0.96% in April. At 12 months it exceeds 6.82% and it seems certain that this year it will exceed the goal of 3%.

The private pension fund system was copied from Chile, but unlike the neighboring country, in Peru the withdrawals of money have not caused political confrontation.

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