Thus, the Superintendency of Banking, Insurance and AFP (SBS) approved extraordinary measures regarding investments with the purpose of providing the AFPs with the necessary instruments to mitigate the impact on the expected replacement rates and future pensions of members, derived from the eighth withdrawal in process.
Pension funds are not prepared, by structure, to be liquid, since they are long-term investments, but there have been eight withdrawals of these resources in four years that have significantly affected the formation of the portfolios and it is necessary to make adjustments, Diego Marrero, portfolio manager at Blum, told Gestión.
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He maintained that withdrawals are not executed homogeneously by fund, and that is why one is more unbalanced than another. After these continuous processes and the smaller size of the portfolio, fund 3 – higher risk – was left with a large participation of local variable income (shares) that would lead it to be more affected if an early sale were to take place to obtain liquidity for withdrawals, he stated.
Transfers
For this reason, one of the adjustments introduced by the rule consists of the extraordinary transfer of local shares. The AFP can transfer these assets from fund 3 to type 1 (conservative) and type 2 (mixed).
In order to carry out the operation, the destination fund must compensate the origin fund (3) with cash transfers. This would help mitigate the damage to the investments of members who decide to keep their money in the pension system, since fund 2 is larger and more diversified and the effect on the share price is not felt much.
For Jorge Espada, managing partner of Valoro Capital, almost finished the first round of withdrawal requests from affiliates, a greater incidence would have been identified in fund 3, which welcomes the youngest workers.
“This time, the SBS has been more precise than in previous withdrawals; it refers to specific funds that possibly register the highest percentage of disbursements (withdrawals). Regulation is made more flexible to avoid a greater impact on the instruments sold and members who do not decide to withdraw their money,” he said.
AFP fund 3 accumulates S/ 13,470 million from its members.
Dollars
Another relevant facility concerns the negotiation limits in foreign currency purchase and sale operations. In this way, until July 2026, excesses to the limits established in the regulations are considered non-attributable.
The AFP must apply reasonable and prudential criteria in the management of such excesses, and ensure that their occurrence and magnitude remain within levels consistent with adequate investment and risk management, the standard specifies.
Marrero explained that, In a context of early liquidity delivery, managers must sell assets that are usually international, so they receive dollars that, when converted into soles, exceed some limits in exchange operations.
“The regulator is very restrictive with these operations, but the fund withdrawal scenario warrants this flexibility,” he said.
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