Regulator: New AFP indicator to increase transparency

The Peruvian banking and insurance regulator SBS will introduce a new indicator that shows pension fund AFP returns, while taking into account the commission charged affiliates by AFPs, the SBS said in a report. The initiative is being undertaken by the regulator as part of a campaign to increase transparency in the private pension system with the final aim of better enabling affiliates to compare the real pension returns offered by the different AFPs. The Peruvian congress recently approved a bill eliminating the six-month period that affiliates currently have to contribute to an AFP before transferring to a competing pension fund manager. The new indicator compliments the new law by providing more information about AFP finances and improving system transparency. New pension reforms are slated to go into effect during the first quarter of 2005. Proponents of the bill hope it will bring down lofty commissions by increasing competition among Peru's four AFPs.