Deputy Fidelio Despradel (Al País-National Deputy) alerted that the bill to amend Social Security Law 87-01 recently submitted by President Danilo Medina to Congress would not accomplish the stated objective of improving pension yield for system contributors. On the contrary, he said it would increase the already inflated earnings by the financial companies that serve as middlemen for the pension plans, the Pension Fund Administrators (Administradoras de Fondos de Pensiones – AFPs).
In a letter sent to the bicameral commission that is studying the bill, Despradel said that the revision would increase earnings received by the AFPs in 2019 to RD$8.17 billion, or RD$1.13 billion more than 2017 yield. He cited findings in a recent Fundación Juan Bosch study that revealed that the earnings of the intermediaries would grow at a 14.3% pace, reaching RD$35.5 billion by 2030.
Despradel said the President has sent a bill to better the situation of the financial pension plan intermediaries at a time when it is well known that the pension plan model in place in the country has collapsed worldwide. He said that if the present situation continues, Dominican workers will receive at most 25% of their present income during their retirement years.
The Social Security Law 87-01 mandates pensions for most Dominicans in the system. But it included an exception (Art. 41) that enables hundreds of thousands of officers at government institutions to receive pensions that are similar to their wages at retirement. Most of these employees that benefit from the positive discrimination clause make over RD$50,000 a month and are employed at centralized and decentralized government institutions.
Read more in Spanish:
El Caribe
Fundación Juan Bosch
Ley Seguridad Social 87-01
27 March 2019