Lawmakers in Peru pass latest pension withdrawal proposal

  • World
  • Friday, 12 Apr 2024

LIMA (Reuters) -Peru's Congress approved a controversial proposal on Thursday that will allow retirees to tap savings accounts that the country's financial regulator estimated could force pension fund administrators to sell some $7 billion in assets.

The bill was passed with 96 votes in favor, five against, and five abstentions.

Over the past four years, lawmakers have approved six previous pension fund withdrawals worth some $24 billion in a bid to provide a boost to cash-strapped savers at a time of sluggish economic growth in Peru, once one of South America's star performers.

Peru's four major pension administrators, which include funds owned by Credicorp and Bank of Nova Scotia, manage a combined portfolio worth some 128 billion soles covering 9.4 million retirees, according to data from banking regulator SBS estimated as of late March.

Retirees with pension funds in Peru represent a minority, however, as about seven out of 10 workers in the country are employed in the informal economy and do not contribute to retirement accounts.

Pension fund administrators nonetheless invest around 60% of the savings they manage in local assets, mostly in government bonds.

(Reporting by Marco Aquino; Writing by Valentine Hilaire and David Alire Garcia; Editing by Sarah Morland)

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