[ad_1]
Although he always warns that pension issues are outside the framework of action of the Central Bank, the president of the entity, Mario marcel, was forced to pronounce repeatedly on them after the alerts raised by the Financial Stability Report.
When reviewing the multiple situations that weaken financial stability in the midst of the pandemic -especially due to the rise in indebtedness and the fall in savings of companies, households and the treasury-, the document reiterated the adverse effect generated by massive transfers of funds from the AFPs that respond to suggestions from unregulated advisers.
CALENDAR He consulted the economist about the meeting held on October 6 with Felices y Forrados -which issues most of these recommendations-, which was revealed by this means. “They proposed to establish a sort of table through which the Central Bank would have to agree with these advisers in relation to the recommendations for transfers of funds that they carry out,” Marcel said about the appointment.
Economy
The company that issues fund change alerts that thousands of members follow seeks to defend its deregulated business, but also assesses ways to formalize.
He added that the response was that it is not appropriate for the entity to establish private dialogue and negotiation tables with system actors. “The regulators are not there to agree with the regulated, but to generate the regulations that the proper functioning of the markets requires,” he clarified.
Amplifying the problems
The president of the Central Bank reported that in the last 12 months, 24 different recommendations for fund changes have been issued, of which three have occurred in the last 10 days.
He explained that as many affiliates switch from one fund to another following these suggestions, the AFPs must sell and buy assets for each fund to comply with legal requirements. “This means exchanging foreign assets for domestic ones, fixed income for variable income, more liquid assets and more illiquid assets. The effect that this enormous frequency of changes involves for the system is not very evident in what it can benefit it,” he said.
Economy
The Treasury and the Central Bank clarify that contributors end up being harmed by unregulated companies that, on the other hand, benefit.
Marcel complemented that although at one time pension savings acted as a buffer against the capital flows that reached our economy, “with the increase in background changes, unfortunately that capacity to cushion has been disappearing.” Thus, in practice, massive transfers can amplify financial volatility, including the exchange rate.
“Volatility in the financial market and exchange rate volatility due to this issue of fund movements is an important issue, not a secondary one,” he said. He added that these transfers also force the AFPs “to maintain a higher proportion of liquid assets, which have lower profitability and in this way the return of all the funds in the system is reduced,” he warned. This means that pensions will be less than what they could have been if savings were invested in assets that did not have to be paid off in these short time frames.
Economy
The manager of the Financial Policy Division of the Central Bank assured that there are information asymmetries in this area.
Before inquiries about the progress of the second withdrawal of funds from the AFPs, Mario Marcel said that since it is a measure still pending, they will not anticipate specific measures, avoiding interfering in the legislative process.
But he pointed out that an eventual second withdrawal “is not a mechanical repetition of the first, because the profile of the affiliates who could access their funds is different, and as they would after the previous withdrawal, their decisions would be different. Furthermore, the portfolio that the AFPs have today is different than before the first withdrawal, after liquidating assets for the equivalent of 6% of GDP “.
The report of the monetary body estimates that around 15% of what was withdrawn after the law passed in July was used to pay bank debts and a slightly larger fraction went to savings. Furthermore, half would have been used for consumption. Making the parallel with this potential retirement, he anticipated that it is now likely to focus on people with higher income or older, who are those who have not yet exhausted the money in their accounts. Therefore, they could allocate a lower percentage to consumption than the previous quota.
In aggregate terms, Marcel recalled that this lower pension savings not only affects future pensions, but also has a long-term impact on the economy. “To grow and not depend on external financing, an economy must have internal savings,” he emphasized. By reducing it, it would be more difficult to finance the investment that is necessary to restore growth.
Economy
Ciedess analysis reveals that of the four million contributors who could be left without balance, 57% are women.
