Profile: Administradora de Fondos de Pensiones Provida SA (PVD)
24 May 2013
Administradora de Fondos de Pensiones Provida S.A. (AFP Provida), incorporated on March 3, 1981, is a private pension fund administrator. The Company's services include the investment and collection of its affiliates’ contributions, the management of individual capitalization accounts and the provision of life and disability benefits, as well as senior retirement pensions. Provida through its subsidiary Provida Internacional S.A. (Provida Internacional) maintains equity interests in private pension fund administrators operating in Peru, Ecuador and Mexico. Provida is also authorized to establish local related corporations that may complement its line of business or invest in pension fund administrators or entities located in other countries whose business is related to pension matters. The Company’s majority shareholder is BBVA Inversiones Chile SA, with 51.62% of its interests.
Collection and management of contributions made by affiliates
The services provided by the AFPs in connection with collection and management of contributions include mandatory contributions and voluntary contributions made by its affiliates. Each dependent worker and affiliate of Provida must contribute 10% of his/her taxable salary into his/her individual capitalization account. Such contributions are deducted from the affiliate’s salary and are used to purchase shares of some of the five types of funds that Provida manages. These funds are legal entities separate from Provida as Administrator. Provida collects monthly mandatory contributions that are withheld from the salaries of Provida’s affiliates by their employers and those contributions from Provida’s self-employed affiliates and voluntary affiliates. Those monthly contributions are credited into each affiliate’s individual capitalization account.
In the case of dependent workers, each employer must provide Provida with a monthly payroll listing all its employees who are affiliates of AFP Provida, identifying the payments being made on behalf of each employee for pension contributions, both mandatory and voluntary. Self-employed workers prepare and submit their own payrolls. AFP Provida offers its affiliates the option to establish a voluntary savings account into which they may deposit additional funds to be invested in the elected pension fund.
The general investment policy of the pension funds is determined by AFP Provida. The general objective of Provida’s investment activity is to administer the investment portfolios composed of the affiliates’ contributions in order to obtain the highest possible return for the level of risk and terms of these affiliates’ profiles.
Life and Disability Benefits
Before the Pension Reform became effective, Provida individually obtained insurance to cover its obligations to provide life and disability benefits to affiliates. If an affiliate dies or becomes disabled prior to the legal age of retirement (65 years of age for men and 60 to 65 years of age for women) and before accumulating sufficient funds in his/her individual capitalization account to finance payments to the affiliate or his/her beneficiaries regarding pension benefits required by law, the AFP has an obligation to make up the shortfall in the affiliate’s individual capitalization account. Under the law, each AFP is required to obtain an insurance policy with a licensed life insurer to provide coverage for this obligation.
Senior Pension Benefits
The Company provides specific senior pension benefits to their affiliates who meet the legal age requirement: 60 years of age for women and 65 years of age for men. At retirement, the affiliate chooses among four options for receiving his/her pension benefits: an immediate life annuity, a temporary income with deferred life annuity, a programmed withdrawal plan or an immediate life annuity with a programmed withdrawal plan.
Administradora de Fondos de Pensiones Provida SA
PISO 7, PEDRO DE VALDIVIA 100
Company Web Links
- Shares of Chile pension fund Provida tumble after MetLife buy
- MetLife to buy BBVA Chile pension business for $2 billion
- UPDATE 1-MetLife to buy BBVA Chile pension business for $2 bln
- Shares of Chile pension company Provida jump on MetLife interest
- MetLife says in talks to buy BBVA's Chilean pension unit