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OECD Reviews of Pension Systems: Peru

image of OECD Reviews of Pension Systems: Peru

This review assesses Peru’s pension system in its entirety, looking at both public and private, pay-as-you-go (PAYG) financed and funded pension provisions. The review then provides policy options to help tackle old-age poverty; establish a solid framework for the contributory pension system to meet its objectives; improve the coverage and level of pensions; and optimise the design and improve the regulation of the funded private pension component. A further goal of these proposals is to improve the Peruvian population’s trust that the country’s pension system will be able to deliver secure retirement income in old age.

The review is the fifth in a series of country reviews of pension systems [Ireland (2014), Mexico (2016), Latvia (2018), and Portugal (2019)]. These reviews provide countries with policy options that will help them improve the functioning of their overall pension system. Tailored policy options are proposed based on the specificities of the national pension system, and on international best practices regarding reforms, design and regulation of pension systems.

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Optimising the design of the private pension system for the pay-out phase

This chapter focuses on the pay-out options of the private pension system. The main objective of a pension system, to provide a regular income in retirement, is currently undermined by the fact that people are allowed to take their assets as a lump-sum at retirement. In addition, the incentives for them to take an income option are not sufficient. Reforms need to address these poor incentives and ensure that all pension members receive at least a minimum level of income in retirement, and encourage them to take an income option while being confident that those benefits will be secure. The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.*

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