Peru Congress Approves Partial Withdrawals from State-run Pension Funds

RIO DE JANEIRO, BRAZIL – Peru’s Congress approved on Wednesday, November 2nd, the partial withdrawal of funds from its state-run pension system as a lifeline for Peruvians still reeling from the economic impact of the coronavirus.

In an overwhelming 87-21 vote, lawmakers greenlighted the proposal over the objections of interim President Francisco Sagasti, who earlier this week warned he would take the bill to the country´s Constitutional Court.

The vote comes just weeks after lawmakers approved two similar withdrawals from the country´s parallel, privately-run system.

Most Peruvians prefer the larger, privately-run pension system, but many state-workers, and some in private business, opt instead for the state-run plan.

The latest bill would allow members of the state-run Office of Pension Normalization (ONP) to draw up to 4,300 soles (US$1,192) from the system. The bill, if it becomes law, would drain nearly 16 billion soles (about US$4.42 billion) from the state system, according to the Ministry of Economy and Finance.

Sagasti said earlier this week he opposed the bill because of the damage it could do to the government treasury, already in dire straits as Peru, the world’s No.2 copper producer, struggles through one of its deepest recessions in decades.

Lawmakers, however, say many of those enrolled in the public system are already in poverty and desperately need the funds.