The Chamber of Deputies has been given the task of drafting a bill to modify Social Security System Law 87-01. The aim is to lower the commission collected by the Pension Fund Administrators for managing the pension funds to 15%. The proposal is to establish a reduction to a 5% complementary commission for the AFP Reservas, because they consider it to be a state-owned financial company and should therefore not seek excessive profits.
The initiative was submitted by Ramon Cabrera, the Chamber of Deputies Economy, Planning and Development Commission chairman, who said that after carrying out a comparative study of pension systems in Central and Latin America, and finding out that none of the countries has a complementary commission. Costa Rica is the only place where 7.5% is collected, while in the country the AFPs charge 30%. Cabrera warned that the management of the Dominican workers’ money has become the most lucrative business for these companies.
In a 14 August meeting with the Superintendence of Pensions (SIPEN) the pension fund administrators agreed to drop their commission by 5%, from 30 to 25%. Diario Libre newspaper had revealed the excessive profits reaped by the pension fund administrators thanks to the 30% commission authorized by the social security law. The critics pointed out that the companies had a captive market with zero risks and called for lowering the commission so that funds could benefit the pension holders instead.
As a result of the high 30% commission that the Pension Fund Administrators were charging, in the month of June alone they received earnings of RD$730.8 million, which compared with the RD$239.8 million received in the same period last year represents a 204% increase, equal to RD$491 million.