OECD Reviews of Pension Systems: Peru

Foreword
Executive summary
Chapter 1.  Introduction to the review of the Peruvian pension system
	1.1. Objectives of the review
	1.2. Structure of the review
Chapter 2.  Context and description of the current Peruvian pension system
	2.1. Macroeconomic and demographic context
	2.2. The Peruvian pension system: reforms and current structure
		2.2.1. Historical background
		2.2.2. Description of the current pension system
	2.3. Non-contributory pension for the elderly
	2.4. The pay-as-you-go national pension system
		2.4.1. Early retirement
		2.4.2. Disability pensions
		2.4.3. Survivor pensions
		2.4.4. Reserve fund
	2.5. Special regimes
		2.5.1. Civil Service scheme (Cédula Viva)
		2.5.2. Police and military personnel (Caja de Pensiones Militar Policial, CPMP)
		2.5.3. Fishermen (Regimen Especial de Pensiones por los Trabajadores Pesqueros, REP)
		2.5.4. Journalists
		2.5.5. Leather industry workers
		2.5.6. Housekeepers
		2.5.7. Pilots and co-pilots
		2.5.8. Maritime workers
		2.5.9. Civil construction workers
		2.5.10. Mining, metallurgy and iron and steel industry workers
			Underground
			Open pit
			Mining, Metallurgical and Steel Centres
	2.6. The funded private pension system
		2.6.1. Retirement savings accounts
		2.6.2. Asset management fees
		2.6.3. Disability and survivor insurance
		2.6.4. Retirement age
		2.6.5. Pay-out from the retirement savings accounts
	2.7. Workers in risky occupations
	2.8. Voluntary pension savings
	Notes
	References
Chapter 3.  Tackling old-age poverty
	3.1. Addressing old-age poverty
		3.1.1. Poverty levels
		3.1.2. Pensión 65
	3.2. Coverage and benefit of Pensión 65
	3.3. Impact of Pensión 65
	3.4. Policy options
		3.4.1. Increase awareness of benefits
		3.4.2. Increase benefit amount and threshold
		3.4.3. Change the benefit to a top-up payment rather than flat-rate
	References
Chapter 4.  Establishing a solid framework for the contributory pension system
	4.1. The choice between the SNP and the SPP
	4.2. Procedural errors from a parallel system
	4.3. Cost and financing of the SNP
	4.4. Cost of special pension schemes
	4.5. Policy options
		4.5.1. Design a complementary and financially sustainable pension system
			Benefit formula for the public pension component
			Minimum pension
			Survivor and disability pensions
			Split of contributions
			Implementation
		4.5.2. Centralise the contribution management and data collection of the entire system to promote information sharing and efficiency gains
	Notes
	References
Chapter 5.  Improving the coverage and level of pensions
	5.1. Coverage of the contributory pension system
		5.1.1. Affiliation with the pension system
		5.1.2. Labour market and informality
	5.2. The level of pension benefits
		5.2.1. Contribution levels
		5.2.2. Contribution density
		5.2.3. Replacement rates
		5.2.4. Replacement rate sensitivities
		5.2.5. Withdrawals during accumulation in the SPP
		5.2.6. Early retirement in the SPP
	5.3. Policy options
		5.3.1. Promote formal employment and improve coverage of the pension system
			Increase the relative cost of informality
			Encourage informal and independent workers to join and contribute to the pension system
				Targeted subsidies for low-income informal workers
				Mandating participation for independent workers
				Nudges for independent workers
		5.3.2. Increase contribution levels and density
			Increase mandatory contribution rates
			Automatically enrol individuals to contribute higher amounts in the SPP
			Improve accessibility and incentives for voluntary contributions
		5.3.3. Allow withdrawals of only voluntary contributions for first home
		5.3.4. Close the gender gap for early retirement
		5.3.5. Limit early retirement
	Notes
	References
Chapter 6.  Optimising the design of the private pension system for the accumulation phase
	6.1.  Investment of pension assets
		6.1.1. Available funds and investment choice
		6.1.2. Asset allocation and fund performance
	6.2. Cost and services of the AFPs
		6.2.1. Management fee structure
		6.2.2. Competition
		6.2.3. Profitability and costs
		6.2.4. Switching between AFP
		6.2.5. Administration and services provided
	6.3. Policy options
		6.3.1. Adapt the default investment strategy to a more optimal lifecycle approach and allow for flexibility in the default for voluntary savings
			Provide a more gradual path to de-risk investments
			Allow different investment strategies for voluntary savings
		6.3.2. Implement independent investment benchmarks to assess and compare investment performance
		6.3.3. Ensure charges are aligned with costs and promote competition
			Improve disclosure and reporting of costs and fees
			Impose a fee structure to better align the incentives of providers and members
			Align fees on voluntary contributions with those for mandatory contributions
			Establish limits around frequent switching
		6.3.4. Remove the minimum guaranteed return
		6.3.5. Align the responsibilities of the institutions with their expected role in the system
	Notes
	References
Chapter 7.  Optimising the design of the private pension system for the pay-out phase
	7.1. Options for pay-out at retirement
	7.2. Annuity market
		7.2.1. Annuity sales and pricing
		7.2.2. Reserving and capital requirements
		7.2.3. Managing longevity risk
		7.2.4. Protecting members in insolvency
	7.3. Policy options
		7.3.1. Address poor incentives created by the lump-sum pay-out option
			Require a minimum pension to be paid
			Introduce financial incentives to encourage individuals to take a pension instead of a lump-sum
			Introduce incentives to limit gaming of the pension system
		7.3.2. Simplify the options available
		7.3.3. Ensure the security of pension benefits
			Ensure the appropriateness of assumptions used to calculate benefits
			Ensure that appropriate mechanisms are in place to safeguard pensioners’ benefits
	Notes
	References
Chapter 8.  Trust and confidence in the pension system
	8.1. Measures to improve the understanding of the pension system
		8.1.1. Financial education efforts
		8.1.2. Communication on the pension system, pension accounts, and benefits
	8.2. Trust and confidence in the institutions of the pension system
		8.2.1. Reasons for dissatisfaction with the financial institutions of the SPP
		8.2.2. Low levels of trust in public institutions
	8.3. Governance and supervision
		8.3.1. Corporate Governance
		8.3.2. Supervision of the SPP
	8.4. Policy options
		8.4.1. Promote financial literacy and education about the pension system
		8.4.2. Improve confidence in the private financial institutions of the SPP
			Provide a centralised and neutral contact point for the affiliate to file requests, initiate procedures and manage payments
			Improve accountability and governance of AFPs
		8.4.3. Improve confidence in the public institutions of the SNP
			Improve transparency and governance of the management of contributions
			Strengthen regulatory and supervisory powers of the SBS
			Establish broad based and comprehensive reforms and implement them gradually without losing sight of their long term horizon
	Notes
	References
Chapter 9.  Summary of recommendations from the OECD review of the Peruvian pension system
	9.1. Tackle old-age poverty
	9.2. Establish a solid framework for the contributory pension system to meet its objectives
	9.3. Improve the coverage and level of pensions
	9.4. Optimise the design of the private pension system to improve outcomes
	9.5. Improve trust and confidence in the pension system