The Chamber of Deputies declared the legislation urgent and approved it in two consecutive sessions yesterday, Wednesday 9 March 2016, modifying articles 44 and 86 of Dominican Social Security System Law 87-01. The amendment caps 15% on the earnings on of the certificates of deposit obtained by the Pension Fund Administrators. The motion reduces what was considered an excessive yield in benefit of the pension fund administrations, most of which are owned by already very profitable commercial banks.
The legislation establishes that all the pensions granted under the benefits of the payroll deduction regime established in article 44 of Law 87-01, should be updated annually in line with the Central Bank’s Consumer Price Index.
As reported in El Nacional, this modification of Law 87-01 includes the addition of a paragraph to article 86 that creates the Dominican Social Security System, and “establishes a complementary annual commission applied to the fund administration of up to 15% of the earnings obtained that are above the interest rates of the certificates of deposit of the entities of the financial intermediates.”
The Pension Fund Administrators currently earn 30% interest on the funds generated by the insurance contributions to the banking entities. The legislative bill, now approved by the deputies, will be sent to the Senate for study and discussion.
