A private pension fund industry chief said the specter of political interference is constantly circling the sector in Latin America.

Decisions correspond more to ideological bias of “certain political groups” than the advice of pension experts, a webcast hosted by industry organization the International Federation of Pension Funds Administrators (FIAP) was told.

“The private pension systems in our region are constantly under political threat,” said FIAP chairman Guillermo Arthur Errázuriz.

He cited the example of Chile, where some quarters of the left-wing opposition – amid debate on a wider pension reform that modifies and strengthens the country’s system – want to fully dismantle it and return to a public, or pay-as-you-go, regime.

“There are political voices that claim for the return to the old and fiscally unsustainable pay-as-you-go system with the hope that this will improve workers’ pensions, which is far from reality and will worsen the sustainably of the system as a whole,” Arthur said.

Chile’s population is ageing and experts say a mixed system where employee, employer and the state have roles would tick the right boxes if correctly designed and implemented.

Arthur also referred to Peru, where a recent bill, backed by congress but opposed by the president, allowed pension fund members to withdraw 25% to help them amid the health crisis.

This is the latest of several similar initiatives in the country. “In Peru, the private pension system is being constantly dismantled, deviating pension savings to other objectives beside pensions,” Arthur said.

Read more @BN Americas