Guatemala: All Pension Funds Will Deduct Taxes

According to a Constitutional Court decision, contributions to all pension funds may be deducted from taxes.

Friday, February 4, 2011

Before this decision only contributions to pension funds authorized by the Superintendence of Banks were deductible from income tax (ISR).

The ruling goes further and states that any mechanism for funding an individual´s pension plan may be deductible, "any mechanism for pensions and retirement which is individually funded will be fitted to deduct income tax", established the ruling.

More on this topic

Workers Lend Cheap Money to the State

February 2014

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.

Flexiblity in Pension Fund Investments

March 2012

Given the low returns from pension funds in El Salvador, there is discussion on removing the requirements for operators in order to invest in more instruments.

The pension fund administrators (AFP in Spanish) and the government are exploring alternatives for increasing the profitability of the pension savings system.

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

Operators pension resent low yields

March 2008

The low yields hit the income received by the operators of pensions (OPC), and thus their profits.

Revenues from the OPC-together-were reduced by 21% in the past year, going from ¢ 3,580 million in February 2007 to ¢ 2,810 million in the past month.

The Carriers Revenues come from the commission on yields they apply to pensions obligatorias.

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