Commission proposes higher pension contributions

Peru's social security commission has introduced legislation that would raise mandatory contributions to individual retirement accounts from 8% of gross salary to 9%, local financial daily Gestion reported. Salaried workers originally were required to contribute 10% of their salaries to pension fund managers (AFPs) when the pension system was privatized in 1994. However, the contribution level was reduced to 8% in 1995 because of a weak economy and held at that level ever since. According to bill sponsor, former congressman Xavier Barron, contributions need to be returned to 10% in order to guarantee retirees an adequate pension. Peru's congress will vote March 2004 this legislation and a motion to allocate the country's banking and insurance regulator SBS the authority to fix offshore investment limits for the country's private pension fund managers, the AFPs.