El Salvador: Profitability of pension funds drops to 3%
The profitability of the Pensions Savings System (SAP) dropped from 6.33% to 3.14%.
Tuesday, January 20, 2009
Elsalvador.com reports: "There is no need to use a magnifying glass to look for the reasons. They are very clear, according to the superintendent of pensions, Victor Ramirez, and the director investments at the Crecer Pension Fund Administrator (AFP), Carlo Escalante.
A new reform is being prepared containing the rules governing the activities of Pension Fund Administrators, seeking to improve the profitability of the contributions for all contributors.
The obligation to satisfy the state’s appetite for money is compromising the profitability of pension operators and the size of contributor’s future pensions.
The Ministry of Finance is reviewing eliminating life annuities, a benefit which affects about 130 thousand people, in place thanks to a decree by the government of Elias Saca.
A law passed by the Legislative Assembly authorizes the State to use the savings of contributors to pay debts, putting at risk the value of future pensions.
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