May 5, 2011 / 11:26 PM / in 8 years

Peru proposes law to protect private pension funds

 * Law would safeguard right to choose privately run funds
 * Humala plan envisions all workers paying into state fund
 * Humala has vowed not to touch AFPs, despite platform
 By Dante Alva
 LIMA, May 5 (Reuters) - Peruvian lawmakers will soon
discuss a proposal that would safeguard $30 billion in private
pension funds from meddling by future governments, the head of
the Congress's economic commission said on Thursday.
 The bill is in response to a clause in presidential
candidate Ollanta Humala's campaign platform calling for all
workers to contribute to a newly revamped public pension system
and making contributions to private funds, known as AFPs,
 The measure, sent to Congress by President Alan Garcia on
Wednesday, preserves "the right to choose between a public or
private pension fund so that no intervention from authorities
can violate that," commission head Rafael Yamashiro said.
 Private pension funds in Peru, one of the world's
fastest-growing economies, are the biggest investors in the
local stock market and also put money into housing
construction, infrastructure and government bonds.
 "The funds belong to contributors and there can't be
intervention from the government of the day," Yamashiro said.
  Full coverage of election                 [ID:nVOTE2PE] 
  Candidates' policy proposals            [ID:nN28235178] 
  Political risks in Peru                    [ID:nRISKPE] 
 Some analysts fear ultra-nationalist Humala would repeat
Argentina's takeover of private pension funds in 2008.
 But Humala, technically tied in polls with right-wing
lawmaker Keiko Fujimori ahead of a June 5 run-off vote,
seemingly backtracked last month when he vowed not to touch the
AFPs if elected. [ID:nN19299960]
 His team says the nationalist party's proposals, including
guaranteed pensions for all Peruvians over 65 years old, would
be funded by new taxes. [ID:nN13295500]
 Peru's anemic public pension system is plagued by problems,
with contributing individuals and firms often missing
 About 4.7 million people contribute to the AFP funds,
representing the bulk of workers enrolled in a pension plan.
 Humala narrowly lost Peru's 2006 presidential election on a
radical leftist platform and he has since sought to recast
himself as a moderate in the style of Brazil's Luiz Inacio Lula
da Silva.
 He pledges to respect Peru's many free-trade agreements and
an independent central bank, but he has faced increasing
pressure to explain discrepancies between his public positions
and his official campaign platform.
 (Writing by Caroline Stauffer; Editing by Hilary Burke and
Andrew Hay)

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