The Chamber of Deputies passed on Tuesday, 4 February in two consecutive sessions a bill that modifies the commission scheme applied by the Pension Fund Administrators (AFP). The commission is reduced over a nine-year period from 25% to 0.75%. Nevertheless, the lower commission will be applied to the total funds managed by the bank affiliates instead of to the actual yield of the funds. Economy Minister says this reduces the earnings of the AFP administrators by RD$53 billion in 10 years.
But AFP specialist Matías Bosch explains the new scheme ensures stability in earnings to the pension management companies because while there may be ups in downs in yield, there is always an increase in the total funds.
In an op-ed article in El Dia and a feature in Acento online portal, Bosch estimates that following the present trend of 15% annual increase in the funds, this means a bonanza for the pension plan management companies. He estimates that if from 2004 to 2018 the AFP had earnings of RD$33.49 billion, from 2020 to 2029 their earnings would increase to RD$47.75 billion.
Bosch has written extensively on how the pension plan scheme works in favor of big finance corporations and delivers little to contribute to the retirement of Dominicans in years to come.
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Z101 Digital
Acento
El Dia
6 February 2020