Persia Alvarez, the director of the Pension Plan System in the DR, favors investing the RD$5.5 billion in savings in the system in the electricity sector. She told Hoy newspaper that her department is also considering other productive areas, such as technology companies, small business and infrastructural works.
Inflation in 2003 practically wiped out the purchasing power of the retirement savings of Dominicans that are discounted from monthly wages. As it stands, the law requires that the funds be invested locally and impedes them from being converted to US currency at a time when currency depreciation accelerated and savings otherwise were being dollarized to avoid loss of value. The funds are held in local commercial banks. Recent reports indicate that more than two thirds of commercial bank deposits have been used to purchase Central Bank certificates.
Alvarez, who sees great potential in the funds, told Hoy newspaper that 84% of workers in the Dominican Republic are under 44 years of age. Records show that 1,095,000 Dominicans pay into the funds that are handled by affiliates of the commercial banks.