Salvadorans Unions are opposed to the purchase of unrated debt using capital from the Pension Administration Fund.
The Committee to Defend Workers Pension Funds believes that they will start to purchase fraudulent bonds in order to repay the debt of an institution which, since it started the program "Housing for Everyone" has administered in an "impaired" fashion, the funding for this initiative.
The Salvadoran Association of Pension Fund Administrators has presented proposals to increase collection and maximize pension returns.
Among other proposals, there is a suggestion to rise the interest rate paid by the Government for the certificates that are purchased, in an obligatory fashion, using pension savings, going from an average rate of 1.49% to 4% or more.
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)."
The Nicaraguan agricultural sector faces a funding shortfall of $50 million for the current production cycle.
The Minister of Agriculture and Forestry, Ariel Bucardo, in an interview with La Prensa of Nicaragua, said that the total funding required for the three agricultural cycles is $400 million, and added that "we still do not know how much funding is available."
The interest rate that the Government of El Salvado pays for money from the Pension Funds is not more than 1.3%, while international investors are paid more than 7%.
Ricardo Soriano, Chairman of the Committee for the Defense of Workers Pension Fund of El Salvador (Comtradefop) reported that since the year 2006, the State has forced the Pension Fund Administrators (AFP) to invest the money belonging to Salvadoran workers in Pension Certificates, initially 30% and the 45% in 2012, money which has suffered a loss greater than $938 million each year.
It is expected that the Law of Pension Savings System will soon be reformed, reducing the commissions earned by AFPs from 2.7% to 2.2%.
A majority of members of the Finance Committee of the Salvadoran Legislative Assembly have endorsed amendments to the Law on the Pension Savings System. The main changes include a reduction of the commissions earned by Pension Fund Administrators (AFP in Spanish) from 2.7% to 2.2%, and allowing up to 45% of pension savings to be invested in Pension Investment Certificates (IPC in Spanish) issued by the state to pay for pensions under the previous system.
The government of El Salvador is promoting a reform to lower the percentage of commission given to the AFP from contributions, from 2.7% to 2.2% and that seeks to improve yields for contributors.
The government of El Salvador has listed a series of reforms to the pension law. One is to reduce the commission received by the AFP from 2.7% to 2.2% for each contribution in order to increase the returns to workers.
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