This Monday on the Platform program, the economist, José Luis Magaña spoke about the pension system in El Salvador, where he indicated that to understand it it is necessary to remember the privatization of pensions approved in 1996, where the AFP began to manage said money.
“When a person retires they will only be able to acquire what they have saved in their individual account, in this way the amount they will receive in retirement will be calculated… “After 2001 the government needed debt to pay the pensions of contributors who retired before of the 1996 reform, to continue covering this obligation, it must request loans from the Legislative Assembly,” he added.
Subsequently, the FOP was created, which was a new common pool where the government takes that money to pay pensions, without the need for loans, the money comes from certificates issued by the Ministry of Finance, with a limit of 40%, he explained.
“In December 2022, the new pension reform was approved, where the FOP was eliminated but the ISP was created, which performs the same functions as its predecessor. The change is that the Ministry of Finance no longer issues debt, but the ISP does.” .
The economist also added “that the effects of this reform will not be visible now, but they will be felt when people retire, where the 4 years without payment of interest from the government, for the money it has lent from the fund, will take weight. pensions,” Magaña concluded.
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