Peru Lawmakers Propose Bill to Prevent Pension Takeover

May 6, 2011 ( - A proposal before Peruvian lawmakers aims to protect $30 billion in private pension funds from takeover by future governments.

Reuters reports that the bill is in response to a clause in presidential candidate Ollanta Humala’s campaign platform calling for all workers to contribute to a newly revamped public pension system and making contributions to private funds, known as AFPs, optional. The measure preserves “the right to choose between a public or private pension fund so that no intervention from authorities can violate that,” commission head Rafael Yamashiro told Reuters.  

Analysts fear a private pension takeover similar to that in Argentina in 2008 (see Nationalization of Argentine Pensions “in the Bag”).  

However, according to the news report, Humala, technically tied in polls with right-wing lawmaker Keiko Fujimori ahead of a June 5 run-off vote, last month vowed not to touch the AFPs if elected. His team says the nationalist party’s proposal for guaranteed pensions for all Peruvians over 65 years old would be funded by new taxes.   

Reuters said Peru’s public pension system is plagued by problems, with contributing individuals and firms often missing payments. About 4.7 million people contribute to the AFP funds, representing the bulk of workers enrolled in a pension plan.