The BCR has separated the Register of Savings Debt for Pensioners from the Total Public Debt Balance. /DEM
Since the pension reform, the state has provided $455.42 million in new Certificates of Pension Obligations (COPs) acquired by pension fund administrators (AFPs) with donor funds to help the state pay pensions to pensioners with no savings. Issued.
The COP was created in a reform approved in December 2022, giving the El Salvadoran Pension Institute (ISP) the power to issue COPs and allowing AFP-administered pension funds to issue these funds “without cap” without the need for interest rates. You can now invest in COPs. dangerous.
This power was given to ISPs by the Special Act on Issuance of Pension Obligation Certificates and Dissolution of Pension Obligation Trusts, which is the body that declared that ISPs retain information on the amount and date of issuance. .
For Enrique Anaya, a former member of the Workers’ Committee to Advocate Pension Funds, the government “withdrew $455 million” from pension savings through ISPs.
Prior to the reform, pension obligation trusts (FOPs) issued pension investment securities (CIPs). The FOP was dissolved with the reforms and the pension obligations rescheduled to a new 50-year term with a grace period of four years and an annual interest rate of 7%, according to two risk rating agencies. Profitability after renegotiation is 6.9% per year, according to AFP news agency.
They want to create a kind of “bolasaldo”, but at the fiscal level, say “report public debt but no pension”. Patricio Pineda “Table for a Pension with Dignity”
BCR hides public debt data.
As of April 2023, the Central Reserve Bank (BCR) excludes pension obligations from total public debt, thus reducing public debt from $25.7945 billion to $19.58806 billion.
The state’s debt to FOP stood at $6,184.64 million in January and remained unchanged in February and March. Beginning in April, the Debt to FOP box will appear empty and the Total Debt chart will drop.
Patricio Pineda of the Roundtable for Dignified Pensions believes that debt is actually increasing, but they want to “create a kind of fiscal eraser” that reports public debt excluding pension debt. ing.
Experts asserted that this is known professionally as the “implicit” of pension obligations and could be interpreted as a return to pay-as-you-go pricing.
This means that in April 2023 the government of El Salvador withdrew $455 million from workers’ pension savings through ISPs. ” Enrique Anaya, Pension Lawyer
73% of the assets are in state-owned enterprises.
According to the Financial Supervisory Service (SSF), the total assets of pension savings accumulated by AFP-contributing workers by January was $14.512 billion. The breakdown is available $240.8 million (1.65%), accounts receivable $1.2342 billion (8.5%) and $13.0377 billion. One million people (89.8%) invest in securities.
Of the savings invested in a variety of income-generating products, 73.4% is deposited with various state agencies, totaling $9,578.7 million. Of this amount, $8.852 billion is held in custody and the funds obtained will be used to pay public plan pensions and pensioners with no savings. A minimal portion of workers’ savings is invested in banks, companies, foreign securities, securitizations and investment funds.
National Pension Debt and Reform
The state borrows money from AFP’s contributing workers so that it can pay pensions to beneficiaries who have run out of savings. The new law still allows it. As?
1.- Creation of POPs
Authorizes the El Salvadoran Pension Association to issue social security obligation certificates purchased by AFP without restrictions or risk assessment.
2.- CIP, Accumulated Debt Conversion
The national debt with pension savings accumulated in the CIP was converted to CFT with an interest rate of 7% (6.9 according to Asafondos), a term of 50 years and a grace period of 4 years.
Source: Diario Elmundo
