Peru’s congress approved a bill designed to increase competition among private pension funds and reduce their fees.
The standing committee of Peru’s unicameral legislature voted 11-10 in favor of the bill late yesterday, congress said in an e-mailed statement. The bill now needs to be signed into law by President Ollanta Humala.
The legislation, which the government presented to congress a month ago, seeks to boost the number of pension fund managers, known as AFPS, from the current four and entice more people to take out private retirement plans. Providers will move from salary-based commissions to a system of fees based on the size of the workers’ pension savings while new customers will be obliged to join the AFP offering the lowest fees via an auction system.