Peru's Congress authorizes second pension fund withdrawal in defiance of president

In April, Peru's Congress enacted a similar law allowing people to withdraw up to 25% of their holdings in private pension funds.

Peru´s Congress on Monday approved a law that would allow citizens of the Andean nation to withdraw more of their holdings from private pension funds in order to ease the economic blow from the coronavirus pandemic.

The law, passed almost unanimously despite steadfast opposition from the administration of President Martin Vizcarra, authorizes the withdrawal of up to 17,200 soles ($4,765) from the private retirement system by members who have not contributed for more than 12 consecutive months. In April, Peru's Congress enacted a similar law allowing people to withdraw up to 25% of their holdings in private pension funds. That law allowed for a maximum withdrawal of 12,900 soles ($3,573).

The Economy Ministry and Central Reserve Bank have warned a second round of withdrawals would affect the solvency of the financial system. Four private pension fund companies operate in Peru. In March, just prior to the passage of the first measure, they managed an equivalent of $46 billion.

The funds were forced to liquidate assets in both local and foreign markets through July to accommodate the withdrawals after the first law was passed.