Peru’s financial services regulator SBS published rules governing a forthcoming tender for a contract to gain new workers entering the private pension fund, or AFP, system. Bids are due to be presented and opened on December 18, SBS said in a statement.

The winning party will accept workers from June 1, 2021 to May 31, 2023. These will remain with the AFP for a minimum of two years. But contributors can, after 180 days, move to a new AFP if the latter offers better returns net of commissions.

The tender is the fifth held by Peru, where commissions have fallen steadily, by 7% in the second, 23% in the third and 38% in the fourth, SBS said. Peru has four AFPs – AFP Habitat, AFP Integra, AFP Prima and AFP Profuturo – which have seen assets under management crumble this year following legislation giving contributors early access to their funds. Those backing such moves say AFP contributors need access to their savings to help weather the coronavirus crisis.

Those against them argue the policy moves are populist and will damage future pensions. AFPs are also major purchasers of government debt. AUM stood at 152bn soles (US$41.6bn) at the end of September, down from 176bn soles in January, according to SBS data. A bill that would lead to a further reduction remains in limbo.

The draft legislation, which allows AFP members who have not contributed to their pension pots for 12 consecutive months or more to withdraw up to 17,200 soles, was approved by the country’s opposition-controlled congress and sent to then president Martín Vizcarra for ratification. As of early Monday, Peru was without a president after interim leader Manuel Merino stood down amid protests against the ousting of Vizcarra by congress after just five days in office.

Popular among Peruvians, Vizcarra was not represented in congress and had previously locked horns with lawmakers in efforts to combat corruption.

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