The Pension Savings Fund Administrators (AFAP) defended the possibility of invest abroad to improve the profitability of the pension contributions of the workers of Uruguay, in response to the insistence of Town meeting for eliminating this power of the social security reform that is being debated in the Chamber of Deputies.
The National Association of AFAP (Anafap) assured that the pension savings administrators will maintain their institutional investor role and advice to workers, and that the pension reform will not change this aspect, although the latest modifications included greater regulation and limitations on the operations that can be carried out abroad.
This is how he confirmed it Sebastian Peagudamember of Anafap, in dialogue with Underlined.
The general manager of AFAP Surah He expressed that, although the project promoted by the government as a pillar of its reform agenda has some effects that, from the sector, they do not see entirely convenient, “in terms of form, of what it proposes, it is not badly focused.”
In this sense, he highlighted the convenience of maintaining individual capitalization and the pay-as-you-go systemboth in the Social Welfare Bank (BPS) as in the other parastatal funds, which was the complementary system that was approved in Uruguay in 1995. In addition, the unification of all funds and subsystems in a single pension system.
For Peaguda, “you cannot leave all the investments in the country, where the retiree will have a volatility, not only for the country but for its region”. “Withdrawing part of that money, which does not have a correlation with what happens at the national level, makes sense from the point of view of risk,” he added, referring to the intentions of the Cabildo Abierto to limit this possibility, and highlighting the option to get a additional profitability.
What does the Cabildo Abierto intend with the AFAP?
Among the conditions imposed by the Cabildo Abierto to vote positively on the social security reform —something essential for the Multicolored Coalition, that needs the votes of its members to reach the required majority—is the question of “authorizing the AFAP to take money from Uruguayans” out of the country.
For the party leader, Guido Manini Rios, “That money is not from the AFAP”and both the possibility of taking it outside and that it can be placed in the financial market it is risky. The sector understands it as a speculation with the years of effort of the workers; and for this reason they made the elimination of this authorization a requirement.
“We understand that the capital of the Uruguayans must remain in Uruguay to encourage national work, to the national micro, small and medium-sized companies that never have enough oxygen to survive. Here all the benefits are given to large companies that come from abroad, but we forget about the national work, about the great generators of jobs,” Manini Ríos stated at a press conference.
Likewise, yesterday he once again highlighted the government’s inflexibility on this point: “There is talk of a neptune project that you have to do it with private investors that end up costing the country three times the value. (…) Ah, but the Uruguayan money that is in the AFAP, that can leave the country,” claimed Manini Ríos in her weekly intervention in Eastern Radio. “It is enough to take out that article and that point is at least unlocked,” he said, adding that he does not understand “why they don’t take it out.”
From the Executive power, For their part, the closest they came to responding to the Cabildo Abierto claim was the modification of the articles, adjusting the limits and guarantees of investments abroad of the AFAPs to reduce their risks. Meanwhile, as confirmed by Anafap, these administrators will be able to continue operating abroad with the money contributed by the workers in Uruguay.
Source: Ambito
