SIPEN gets the AFPs to lower commission from 30% to 25%
Diario Libre
SD. The Pension Fund Administrators (AFPs) and the Superintendency of Pensions (Sipen) managed to reach an agreement yesterday through which the AFPs will lower from 30% to 25% the commission that they charge for administering the pension funds.
This was reported by Joaquin Gernonimo, the Superintendent of Pensions and Kirsis Jaquez, the president of the Dominican Association of Pension Fund Administrators (ADAFP).
The decision comes after a series of reports by the Diario Libre newspaper which underlined the high profits of the AFP and that the AFPs had acted in collusion to charge the highest commission of 30% and not compete among each other.
The reduction in the complementary commission by five points represents a savings that will vary between RD$1.0 billion and RD$1.5 billion for the next 18 months, according to sources in the sector.
Through the accord, the two entities commit themselves to form a joint technical commission to study possible adjustment measures to the system of assessment of the market of investment portfolios of the AFPs in order to correct distortions that could appear due to the effects of unexpected fluctuations in the market.
To this end, "a mixed technical committee will be appointed that includes Sipen and the AFPs. It will immediately take on the study of possible amendments to articles 56 and 86 of Law 87-01 before it is sent to the Congress for modification."
Geronimo said that the pension funds have had a sustained growth which has taken them to represent at this time nearly 10% of GDP and a projection for 2020 of 19% of GDP.
He said that the application of fixed commissions on the earnings given the current conditions of the market would represent a situation that is abnormal and out of all comparison with the standards and best international practices regarding regulations.
The AFPs collect a 0.5% administrative commission and a complementary commission whose ceiling is 30%, and which has been objected to by diverse sectors.
Geronimo said that one of the issues that has caught the attention of Sipen over the last three years has been the necessary reduction of the costs for the affiliates in the payroll deduction scheme regarding the application of the commissions for administration and for earnings that the AFPs receive in the performance of their fiduciary responsibilities.
He said that he is in agreement with the majority of the sectors that have argued for the 30% commission that is charged by the AFPS to be reduced to 20%, and that the money saved should go to the workers' accounts.
This was reported by Joaquin Gernonimo, the Superintendent of Pensions and Kirsis Jaquez, the president of the Dominican Association of Pension Fund Administrators (ADAFP).
The decision comes after a series of reports by the Diario Libre newspaper which underlined the high profits of the AFP and that the AFPs had acted in collusion to charge the highest commission of 30% and not compete among each other.
The reduction in the complementary commission by five points represents a savings that will vary between RD$1.0 billion and RD$1.5 billion for the next 18 months, according to sources in the sector.
Through the accord, the two entities commit themselves to form a joint technical commission to study possible adjustment measures to the system of assessment of the market of investment portfolios of the AFPs in order to correct distortions that could appear due to the effects of unexpected fluctuations in the market.
To this end, "a mixed technical committee will be appointed that includes Sipen and the AFPs. It will immediately take on the study of possible amendments to articles 56 and 86 of Law 87-01 before it is sent to the Congress for modification."
Geronimo said that the pension funds have had a sustained growth which has taken them to represent at this time nearly 10% of GDP and a projection for 2020 of 19% of GDP.
He said that the application of fixed commissions on the earnings given the current conditions of the market would represent a situation that is abnormal and out of all comparison with the standards and best international practices regarding regulations.
The AFPs collect a 0.5% administrative commission and a complementary commission whose ceiling is 30%, and which has been objected to by diverse sectors.
Geronimo said that one of the issues that has caught the attention of Sipen over the last three years has been the necessary reduction of the costs for the affiliates in the payroll deduction scheme regarding the application of the commissions for administration and for earnings that the AFPs receive in the performance of their fiduciary responsibilities.
He said that he is in agreement with the majority of the sectors that have argued for the 30% commission that is charged by the AFPS to be reduced to 20%, and that the money saved should go to the workers' accounts.
Diario Libre
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