The AFAP National Association (Anafap) questioned the plebiscite promoted by the PIT-CNT against social security reform and assured that the proposal does not guarantee “the preservation of a financially sustainable pension system” and even considered that it puts “the right to private property at risk.”
From the entity that brings together the Pension Savings Fund Administrators (AFAP) They highlighted that the reform was approved with “necessary political consensus” and valued that “it allowed urgent reforms to be undertaken to the system implemented in 1995.”
Thus, the AFAP They considered that “the reform was a response to a global reality, demographic change” and stated that “pension systems around the world have been migrating from pay-as-you-go regimes to mixed systems (such as the Uruguayan), with individual savings”, something they linked to “a massive increase in longevity and a decrease in birth rates”.
For this reason, they considered that “it is inconsistent with a system that proposes paying retirements of more and more people, for longer, in conjunction with fewer new contributing workers.”
They warn about “expropriation of funds” and “risk” to private property
From Anafap They pointed out that in the current system “the savings account is individual and is part of personal assets, not even seizable, which makes it one of the largest capitals after housing, seen individually.” That is why they questioned whether the proposal of the PIT-CNT respect “the ownership of these funds,” by analyzing that “it seems that they would be expropriated and become the patrimony of the bps (placed in a trust).”
In this sense, they added that the initiative “seems to be willing to take for the State what does not belong to it, putting the right to private property at risk.” In this sense, they indicated that “it expropriates the funds that will no longer belong to each person as much as they have contributed, with a future promise of a better retirement, which the same actuarial studies of the bps They recognize that they will not be able to be paid.”
Thus, the AFAP questioned that “people will lose not only the ability to choose where to put their money, but it will not be able to be inherited, nor used to face a terminal illness, nor to withdraw a part if the conditions allow it near the retirement age.”
The AFAP put the magnifying glass on sustainability
For Anafap, the proposal of PIT-CNT “seems to prioritize an idea over reality, trying to eliminate the AFAP without guaranteeing the preservation of a financially sustainable pension system” and, furthermore, they considered that “it does not offer a clear solution to address the challenges of social security.”
With that idea in mind, they criticized that “although it is explicit, it does not clarify that every time financing for retirement is needed in the future, taxes and levies must be resorted to in an increasing manner, under penalty of collapse, as was the case.” situation prior to the reform that gave rise to individual savings.”
The real profitability of the current system is 6.75% average
Finally, the entity indicated that the AFAP manage more than 22,000 million dollars in the country among 1.5 million Uruguayans, which is equivalent to 30% of the GDP. “These funds have shown a real profitability (in UR) of 6.75% historical annual average in the accumulation subfund, which has been recognized as clearly above expectations,” they highlighted.
Besides, the Anafap He highlighted that “the funds have grown both in contributions and in profitability,” which has meant that in its different modalities the system already has “almost 100,000 Uruguayans collecting their retirement in a safe and self-financed manner.”
Source: Ambito
