Peru's AFPs expect commissions to fall further

The commissions that Peru's private pension fund managers, or AFPs, charge their affiliates will continue falling, according to sector association (AAFP) head Giovanna Prialé.

Prialé cited reductions in "logistical" costs as the main factor.

"The trend in terms of commissions is a downward one and this will continue, because what we want is the consumer to feel satisfied with the service," state news agency Andina reported her as saying.

Prialé said commissions are lower than in Mexico but higher than in Chile.

The system of having AFPs compete for new entrants to the system through tenders has led to a significant decrease in commissions, said Prialé.

The last tender was held in December and succeeded in reducing commissions by 52%, she said. The winning bidder, Prima AFP, offered a compound commission of approximately 0.39%, comprising a monthly flow-based commission of 0.18% and an annual balance-based commission of 1.25%. New entrants to the private pension fund system from June 2017 to May 2019 will automatically join Prima.

Decentralized collection and accreditation platform, AFPNet, have also allowed the AFPs to lower their costs, Prialé added.