The Peruvian government enacted a law that allows citizens a second withdrawal of funds from the private pension system in order to ease the economic blow from the coronavirus pandemic, according to the official newspaper El Peruano.
Peru is digging out from a political crisis that has rattled a country already hard hit by COVID-19 and what is expected to be its worst economic contraction in a century.
Ousted former President Martin Vizcarra had steadfastly opposed the bill as it made its way through Congress, but his successor, Manuel Merino, signed it on Nov. 15. Merino resigned on Sunday after Peru was rocked by protests following Vizcarra’s removal.
A new interim president, Francisco Sagasti, took office on Tuesday. Sagasti, who is seeking to defuse tensions, has not commented on the law since taking office.
The measure, passed almost unanimously, authorizes the withdrawal of up to 17,200 soles (US$ 4,765) from the private retirement system by members who have not contributed for more than 12 consecutive months.
The Economy Ministry and Central Reserve Bank had both expressed concerns that allowing a second withdrawal could impact the solvency of the pension system, as well as the retirement funds of its members.
In April, Peru’s Congress enacted a similar law allowing people to withdraw up to 25% of their holdings in private pension funds. It allowed for a maximum withdrawal of 12,900 soles (US$ 3,573).
Between January and July, the pension funds liquidated assets in local and foreign markets worth nearly US$ 6.7 billion for their affiliates, according to the central bank. The funds have operated in the country for almost three decades.