Peru Court Scraps Law Allowing Withdrawals from State-run Pension System

RIO DE JANEIRO, BRAZIL – On Thursday, February 4th, Peru’s Constitutional Court tossed out a law that would have allowed partial withdrawals of savings by citizens enrolled with state pension fund, a measure that had prompted fierce opposition from interim President Francisco Sagasti.

The court said in a statement that it had voted unanimously to overturn the law, calling it “unconstitutional.”

The law passed by opposition members of Congress in December, intended as a lifeline for those in need amid the coronavirus crisis, would have allowed participants to draw up to 4,300 soles (US$1,192) from the state-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 bill’s passage came just weeks after lawmakers approved two similar withdrawals from the country’s parallel, privately-run system.

Sagasti’s administration, however, had warned that tapping the state-run system would further decimate public coffers, already in dire straits as Peru struggles through one of its deepest recessions in decades.