PPD Deputy Héctor Ulloa called attempts by Pension Fund Administrators (AFP) to normalize losses of nearly 10% in Fund E "outrageous," according to Cooperativa. Alongside Deputy Jaime Araya, he announced that he would push for a special investigative committee in the Chamber of Deputies.
To understand the blow, it helps to know what Fund E is. It is the most conservative of the five types of pension funds. It invests primarily in fixed-income instruments, such as bonds, and is usually a haven for people nearing retirement. It is like keeping savings in the safest drawer in the house. That is why a decline of this magnitude is surprising.
In an interview with Diario de Cooperativa, Ulloa questioned why the administrators maintained their investment strategies despite warnings about the risks. "They are trying to normalize a loss of pension funds that I consider outrageous," he said. He added that the loss affects "primarily those who are nearing retirement".
If you are a few years away from retirement and your savings were in Fund E, the impact is direct: a decline of almost a tenth of your balance translates into a smaller pension if you retire now. The source does not specify how many members were affected or the total amounts involved.
According to the lawmaker, the committee will seek to establish why the AFPs did not change their decisions and whether regulatory and oversight bodies fulfilled their roles. Ulloa pointed to the Central Bank, which he said warned about this situation in November last year.
"The aim is to determine why this situation occurred, what measures could be taken under the legal framework we have today to prevent these situations in the future, and whether this legal framework needs to be amended," he explained.
The deputies requested information from the Superintendency of Pensions, the body that oversees the AFPs, about who suffered losses over the past year, the amounts involved and the effect on their future pensions. They also formally asked the Comptroller General's Office to investigate whether the oversight body had fulfilled its statutory responsibilities.
Ulloa also criticized the recommendation that people about to retire postpone that decision. "It is quite callous, because we are effectively passing the responsibility on to the member to fix this problem that has arisen as a result of poor management by the administrator," he said.
The deputy warned that the problems could recur under the generational fund system, which will replace the multifund system and take effect in April 2027, unless the causes of the losses are clarified and investment and oversight mechanisms are reviewed.
