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Workers allowed to return to public pension system
All workers in Peru who currently participate in the private defined contribution system will be able to return to the public pay-as-you-go pension system, according to a new law that went into effect on March 28, 2007.
The workers who will be able to request the transfer from a private Administradora de Fondos de Pensiones (AFP) to the state run pension system will be those who have either:
- Contributed to the state system until December 31, 1995 and that, at the date of requesting the transfer, fulfilled all the legal requirements to be entitled to receive a retirement pension from the public pension system
- Complied with the necessary conditions to receive a pension benefit in the public system at the time they joined the AFP
The new law also establishes significant changes to the Social Security system. It:
- Extends the minimum retirement pension (applicable to workers affiliated to the national pension system) to workers contributing to the private system
- Establishes that all participants in the private pension system receiving a pension below the minimum of PEN 415 (USD 135) will receive a complementary pension benefit that will compensate the difference
- Creates complementary pension benefits for all workers whose jobs involve performing dangerous tasks, such as construction or mining
- Grants anticipated retirement rights for workers older than 55 years old who have been unemployed for at least 12 months and who have met the minimum contribution requirement during the last 10 years
The law also sets fines and penalties for all firms that fail to deliver workers’ contributions to the social security system on time.
June,
2007
The information included in this report is general information only and should not be relied upon without further review by the appropriate professional advisers. Watson Wyatt is not a law firm or an accounting firm and is not engaged in providing legal, accounting or tax services or advice.
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