Peru's Integra proposes new option for AFP commissions

Peru's largest pension fund manager (AFP), the Sura-backed Integra, has asked financial services regulator SBS to consider a new and more performance-based alternative for AFP commissions.

The present system has two different kinds of commissions in place: a fixed commission charged on the salary of the affiliate and a mixed commission where the charge is made on both salary and account balance. Any change to the current system would have to be approved by congress, Peruvian media outlet Grupo RPP reported.

The Integra proposal would involve two components: a fixed 0.7% commission on total funds under management; and a variable commission that would depend on the fund's 12-month profitability, only kicking in when investment returns are positive, according to the report.

The proposal also suggests that in the event a fund is profitable over the 12 months, the affiliates would receive 95% of that gain while the AFP would pick up the remaining 5% in addition to the 0.7%.

Integra's general manager Aldo Ferrini, as reported by RPP, proposed that affiliates could opt for the new alternative on a voluntary basis and if adopted, it would benefit approximately 56% of all AFP affiliates and 22% of Integra's clients.

According to SBS data for June, The AFPs reported the following numbers of affiliates:

Integra: 2,003,456

Habitat: 1.120,364

Prima: 1,499,027

Profuturo: 1,806,853