LIMA – A new law published Thursday in Peru’s official gazette allows contributors to the private pension system to withdraw up to 95.5 percent of the funds in their accounts in one lump sum upon retirement.
The law was approved when lawmakers overrode President Ollanta Humala’s veto by a vote of 84-2 last week.
In addition to allowing new retirees to immediately dissolve their pension accounts, the law also permits first-time home buyers to use 25 percent of the accumulated funds in their AFP pension account at any time as a guarantee for a down payment on a mortgage loan.
The law also authorizes employees who are terminally ill or have been diagnosed with cancer to withdraw their contributions before turning 65.
Humala had vetoed the pension overhaul bill on Jan. 8, saying it would violate international human rights treaties that Peru has ratified.
After Congress overrode the veto last Thursday, Prime Minister Pedro Cateriano said the president was considering whether to challenge the law’s constitutionality on grounds it would deal a “mortal” blow to the nation’s private pension system.
The National Ombud’s Office said last Friday that it did not regard the pension overhaul as unconstitutional but that the matter could be brought before Peru’s Constitutional Court.