The pension funds reached the astronomical figure of RD$239.6 billion, representing 10.3% of the Gross Domestic Product (GDP) last 31 October. The bad news for the workers who contribute to the funds is that if the current profitability conditions persist, for 2028 the pensions will barely cover 40% of the last salary the received.
The Superintendent of Pensions, Joaquin Geronimo, issued a warning about this situation yesterday, Wednesday 11 December in his keynote speech “Past Present and Future of the Pension Systems in the Dominican Republic” as part of the celebrations of the 12th anniversary of the Superintendence of Pensions (Sipen). Nonetheless, he said that the system has had 15 years to get ready before the workers begin to demand their old age pensions, which according to projections, will be within 15 years, in 2028.
Geronimo stated that the net yield of the pension funds over the past twelve months was 8.79%. The institution that he heads projects that if they can achieve a 6% increase in these earnings, the amount of the pensions to be received could go up to 44% of the last salary.
In order to deal with this challenge, Geronimo says that they need to expand the coverage of contributors. As of last October, only 2,851,000 workers were signed up to the system, but of these barely 1,366,000 (47%) contributed resources on a regular basis. Added to this is the fact that most Dominican workers are in the informal sector, where they do not contribute and the percentage that does contributes very little, as a consequence of the low salaries that they receive.
“Better pensions depend on better salaries,” stated Geronimo during the event celebrated in the Mauricio Baez Cultural Center Auditorium in the Villa Juana sector of Santo Domingo, attended by the social security authorities, union leaders, representatives of the Pension Fund Administrators (AFP) and workers.