(Adds quotes from Habitat official)
By Mitra Taj
LIMA Dec 20 Chilean pension fund Habitat
shook up Peru's pension industry on Thursday, saying it
would slash fees to a fraction of what competitors charge and
winning the right to sign up all new contributors for two years.
Habitat, a unit of Chile's Inversiones La Construccion
and one of the top three pension fund managers in
Chile, submitted a bid so low that it elicited gasps from
members of the audience at the auction run by Peru's banking and
A newcomer to the Peruvian market, Habitat offered to charge
an overall management fee to contributors of 0.548 percent -
about 70 percent less than prevailing fees currently charged by
the four pension funds that run Peru's $30 billion pension fund
Those funds - known as Horizonte, Prima, Integra and
Profuturo - are mainly linked to bank holding companies.
Peruvian President Ollanta Humala said the auction, which
guarantees Habitat an estimated 700,000 new clients over the
next two years in Peru's fast-growing economy, had ushered in a
new era of "healthy competition."
"I suggest the other funds wake up and start lowering
commissions," he said.
Another auction will be held two years from now. Under rules
the government created earlier this year to drive down high fees
that irked customers, pension funds must now periodically
compete for new members by participating in auctions to see who
can offer the lowest commission.
Daniel Schydlowsky, the president of the banking regulator,
said he expected established pension funds to cut fees for about
5 million existing customers or risk seeing them migrate to
"With the commission offered, I wouldn't be surprised if
more people choose to enroll," he said.
Peru's 20-year-old private pension system, which largely
replaced one run by the government, is the most important source
of investment capital in the Andean country. The government
wants to encourage small firms in the informal sector to push
workers onto payrolls and turn them into contributors.
"We expected the competition to be tougher," said Jose
Miguel Valdes of Habitat's legal team.
(Reporting by Mitra Taj; Editing by Terry Wade and M.D. Golan)