El Salvador: $4.4 billion in pension funds

The Pension Fund Association revealed during a forum held by El Diario de Hoy newspaper that the funds administered by the PFA have reached $4.4 billion.

Wednesday, November 12, 2008

15% of this amount is used for required purchase of Contingency Investment Certificates (CIP) issued by the Multi-sector Investment Bank (BMI) for the payment of pensions for public institutions.

The remainder corresponds to CIPs substituted for the former Transfer Certificates and Supplementary Transfer Certificates which comprise 26% of the administrative portfolio.

More on this topic

Poor Results of Pension System in El Salvador

July 2014

The impossibility of investing more in corporate securities and less in government debt is inhibiting the long-term growth of savings managed by pension funds.

Studies by experts in the field estimate that between 2006 and 2012 pension funds missed out on between "... $600 and $900 million." Augusto Morales, director of the Salvadoran Association of Pension Fund Administrators (Asafondos, union of the AFP) told that Laprensagrafica.com "... workers' savings total $7.5 billion between the two administrators. Of that total, $2 billion has generated in 16 years (since the system changed)."

Pension Investment Certificates in El Salvador

April 2012

While supportive of the proposed legal reforms to improve the profitability of pensions, the AFP has requested a minimum interest rate of 4% for the CIP.

The two Pension Fund Administrators (AFP in Spanish) are opposed to a limit on interest payments , because it would affect the benefits for contributors at the expense of protecting state spending.

Employers Question Pension Law Reforms

April 2012

The reform voted in in El Salvador raises the ceiling rate on the amount of government funds that can be used to pay Social Security pensions to 45% and reduces commissions for the AFPs to 2.2%.

The Legislature increased from 30 to 45 percent the ceiling on which government funds can be used to pay for INPEP and ISSS pensions, and decreased from 2.7 to 2.2 percent commissions to the AFP on Thursday when approving reforms to the Law on Pension Savings System (SAP in Spanish).

Salvadoran Pensions Fund Grows Profitably

April 2011

Three years after its creation, the fund's income exceeds $1.5 billion.

Savings accumulated by Salvadoran workers, which make up 25% of the country's GDP, have grown steadily since 1998, the year in which the Pension Savings system was created.

Despite the important growth that the regime has shown in the last two years, one of the main challenges for the pensions sector is to increase the number of members, as well as attract workers from industries such as farming, informal retail and independent professionals.

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