Since they were awarded the juicy contracts, business has been good for the pension fund managers, yet the yield is low for the pensioners. The managing companies receive yields many times what the pensioners will receive after many years on the job. Recently Congress amended the Social Security Bill to further benefit the pension management companies. The pension plans are owned primarily by large financial corporations in the Dominican Republ
Now workers’ pension funds deposited in the Central Bank have been transferred to Ministry of Hacienda to be used for relief operations for the Covid-19 epidemic.
By the operation, the AFPs cashed in RD$40 billion deposited in Central Bank certificates to purchase the same amount in Hacienda bonds. This enables the Medina administration to use the funds to deal with the Covid-19 epidemic. Elections are scheduled for 5 July and polls forecast there will be a change of government.
The operation carried out this way does not affect the public debt because the investment the AFPs had in the Central Bank is just moved to another government entity, the Ministry of Hacienda.
The AFPs secured an increase in yield, from 9.27% in the Central Bank to an average of 10.5% for Hacienda bonds. The operation was divided in four placements of RD$10 billion each with expiration on 28 February 2030, 18 February 2035 and two of RD$10 billion dated to expire 28 February 2040.
The operation was carried out by the four leading AFPs – Popular (Banco Popular), Crecer (Grupo Rizek, formerly Scotiabank), Reserva (BanReservas) and Siembra (BHD Leon).
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El Dia
El Dia TV – Huchi Lora
15 May 2020