International Monetary Fund (IMF) Mission Chief for Peru Ravi Balakrishnan said the international organization welcomes the universal basic pension proposal backed by the Social Protection Committee.
"Then, a universal basic pension makes sense to us, but can increase informality, too," he pointed out.
The referred working group, established this year by
Economy and Finance Ministry (MEF), presented a final report including proposals on pension system reforms, health
financing and unemployment insurance.
This document examines a proposal for a State-funded universal basic pension for those failing to accrue the necessary savings, among other individual capitalization pension alternatives.
"Relying on a comprehensive social protection system with high coverage and adequate pensions is quite important to us. We agree with the Committee's goals and proposals," Balakrishnan said.
Nevertheless, he said achieving 100% individual capitalization coverage and a 70% replacement rate are "extremely ambitious" goals for
IMF, even more, considering the high level of informality.
"And even more, if this runs the risk of raising expectations —among the population— that may not be met in the medium and long-term," he stated.
Balakrishnan said the IMF has some doubts about the proposal impact on Peru's fiscal performance.
(END) MDV/RMB/MVB
Published: 11/14/2017