24 January, 2023

New reform to the pension system is presented to the Legislative Assembly

Given this pension reform, Salvadorans will receive more money during their old age, without paying more, without working more years and without having to return their savings, government ministers say.(Photo courtesy of reference)

Editorial Dept. Voz de la Diaspora

The Savior – Government officials presented this Friday the pension reform for study, consultation and approval in the Legislative Assembly.

According to the proposal delivered by the Minister of Finance Alejandro Zelaya and the Minister of Labor Rolando Castro, Among the proposals is that the employer will pay 1% more, while the employee will continue to pay the same, the AFPs will receive less and the profitability of pension savings will rise.

Given this pension reform, Salvadorans will receive more money during their old age, without paying more, without working more years and without having to return their savings, government ministers say.

Although details of the pension reforms are not yet known, officials assure that with this list of reforms all pensions would increase by a substantial percentage. It will be a better pension for those who are already retired and for all contributors who will go through this process in the future.

Another benefit is that those who have already withdrawn an advance from their savings will not have to return the money, they will not pay more than what they already cancel, they will retire at the same age and their pension will also increase, although in a lower percentage of those who did not withdraw the advance.

further, will be created in the Salvadoran Institute of Pensions (ISP) to defend the contributors and guarantee that they receive what corresponds to them. The AFPs will now be regulated and supervised.

Salvadorans from the diaspora will also be able to voluntarily contribute to the system to receive the benefits of profitable pension savings, safe and in El Salvador.

According to officials, the current pension system is unsustainable and has been since its creation. Of the 12 billion dollars that –supposedly- there is in savings, previous governments already used more than $10 billion. That is to say, that only a sixth of that figure remains in real funds from the savings of contributors.

The vice president of the assembly, Suesy Callejas, indicated that in order to carry out a deep and complete analysis of these proposals, a method will be executed that will be similar to what they did with the Water Law. That is to say, that an Ad Hoc commission will be formed and all the sectors involved will be heard, this from monday,28 November 2022.