LIMA, Dec 27 (Reuters) - Peru’s four main pension funds trimmed their fees on Thursday but not enough to match a competitor from Chile that shook up the local industry last week with rock-bottom prices that may lure away clients.
The drop in fees in Peru’s 20-year old private pension system are a victory for President Ollanta Humala, who pushed reforms through Congress six months ago aimed at lowering costs to broaden coverage.
The funds, which manage some $30 billion in assets, had long been criticized for charging high fees and only covering 5 million people, about one-third of Peruvian workers.
Under the new rules, companies must periodically compete for new members by participating in auctions to see who can offer the lowest commissions.
On Friday, Habitat, a unit of Chile’s Inversiones La Construccion, won the exclusive right to enroll an estimated 700,000 new customers over the next two years by offering to charge workers about 70 percent less than the prevailing commissions.
The sharply lower fees easily surpassed the government goal of lowering fees by 30 percent over several years.
The pension funds that have dominated the market until now, mostly linked to local banks, have reduced their fees by an average of 11 percent since Humala overcame political opposition to revamp the system in July, official data showed.
After last week’s auction, Humala said Peru’s pension funds must “wake up” and start lowering fees. But none of the firms - known as Horizonte, Prima, Integra and Profuturo - came close to offering overall commissions competitive with Habitat on Thursday.
The average new fees the firms introduced after losing the auction are 1.55 percent of monthly salaries, or 1.43 percent of account balances. That compared with Habitat’s commissions of 0.47 percent and 1.25 percent, respectively.