The Administradoras de Fondos de Pensiones (AFP), or pension fund management companies, as of Saturday, 1 February, will seek to register contributors among the 1.2 million individuals employed in the private and public sectors. The Superintendence of Pension Plans will oversee the implementation of the new social security system and President Hipolito Mejia said yesterday that he also will fight for its success, saying ?It is the change that the country needs.?
The system calls for forced savings of employers and employees, and will eventually replace the severance payment plans presently in effect.
Listin Diario explains that the 100,000 private employees that were registered by their employers must now confirm whether they will participate in those same AFPs or move on to other companies.
In the Dominican Republic there are six authorized AFPs. These are AFP Porvenir, BBVA Crecer, AFP Popular, AFP Carialico, AFP Siembre and AFP Reservas (government-owned). Two other AFPs are expected to soon receive authorization: AFP Camino (Asociacion Popular de Ahorros) and one promoted by the Instituto Nacional de Vivienda, the government housing division.
The President of the Dominican Association of Industries, Lisandro Macarrulla, objected to the premature initiation of the social security system, as requirements established in Law 87-01 have not yet been met.president of the AIRD, said that its implementation in February will be impossible, as they have yet to determine the system for the registration of affiliates, establish the ID cards system or finalize the health regime. Also uncertain are the administrative, accounting and information systems. He said that for these reasons, the AIRD favors the system?s postponement until the requirements set by the law can be met.
Virgilio Ortega Nadal, president of the Confederacion Patronal Dominicana (Copardom), a local employers association, said that the Law 87-01 is but a new headache for businessmen. He said it increases the social and labor costs by approximately 50 percent for every peso paid.
Another obstacle to getting the ball rolling is that the government needs to place RD$1 billion into the package.
Last November the government began to execute the health portion of the new social security system. While companies are currently paying into these plans, the administrative systems to operate them are not yet in effect. Meanwhile, the director of the Dominican Social Security System (IDSS), the predecessor of the new social security system, admitted to the press that the primary hospital affiliated to the health care program, the Salvador B. Gautier, has a debt of RD$23 million with its suppliers.
