An expert warns of the danger to the sustainability of the pension system in El Salvador

SAN SALVADOR, December 12 (EFECOM).- El Salvador is entering a state of danger with regard to the sustainability of the pension system, which was reformed by the Legislative Assembly with a pro-government majority, in December 2022, expert Patricio Pineda warned on Tuesday. .

“We are now entering a period in which the sustainability of the system is in real danger,” Pineda told reporters, noting that this is due to the pace of issuance of Certificates of Obligation to Pensions (COP).

These certificates are issued by the state-run Salvadoran Pension Institute (ISP) so that private pension fund (AFP) administrators can lend resources from their shareholders to pay pensions for a system that was abandoned in the 1970s.

The expert asked that if “671 million dollars (about 621 million euros, at today’s exchange rate) are needed to pay pensions in 2023, why did they issue (certificates) 852 million?”, by the Internet service provider until October.

He warned that “if the current pace continues, their number will exceed a billion” in 2023, and objected to the reasons for issuing more certificates than needed, and “we do not know where the surplus goes.”

Pineda pointed out that in terms of liquid resources, “to meet pension obligations there is a little more than $4,000 million” and “if the pace (of issuance) continues, this amount will decrease within three years.”

According to Central Reserve Bank data, the total government pension debt, which includes money the government took from pension funds, amounted to $9,259.41 million as of last October.

In December 2022, the Salvadoran Congress, with a pro-government majority, approved the Omnibus Pension Law and, despite requests for nationalization from some unions, left the resource department in charge of well-known private pension managers. France Press agency.

Added to this list were the law establishing the Salvadoran Pension Institute, which supervises Salvadoran pension institutions, the special law for the issuance of certificates of pension liabilities and the dissolution of the Pension Obligation Fund. Aficom


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