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.

"The effects of the international crisis in the global markets have cause the titles that are invested in the pension funds to be less attractive to people and, hence, their prices fell, and with it, profitability," said Ramirez."

More on this topic

El Salvador: AFPs can Invest Abroad

April 2012

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 Salvadoran government is preparing a second reform of the law on Pension Fund Administrators (AFP), and other possible changes.

El Salvador: The Future of Pension Funds

February 2012

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.

A statement by the Salvadoran Foundation for Economic and Social Development (FUSADES) reads:

The dilemma of pension fund investments

Radical Change in Pension Schemes in El Salvador

July 2013

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.

Elsalvador.com reports that "According to a study on pensions which the Treasury, along with other institutions, is working on, decree number 100 has cost the Government $6 billion, an amount which must be financed by Salvadoran taxpayers."

Government "Eats Up" El Salvador's Savings

September 2016

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.

The Salvadoran Association of Pension Funds (Asafondos) is opposed to the measure because it involves "... an endless cycle of debt generation, which would grow unchecked over time, without guarantee of payment for workers."

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