Observation (CEACR) - adopted 1997, published 86th ILC session (1998)

Social Security (Minimum Standards) Convention, 1952 (No. 102) - Peru (Ratification: 1961)

I. 1. The Committee notes the discussion that took place in the Committee on the Application of Standards at the 85th Session of the Conference (June 1997), and the Government's report received in October 1997. In its report the Government states that the Private Pensions System cannot be examined within the scope of Convention No. 102. The Convention was based on a public social security system which was the only type that existed in 1952 when the Convention was adopted. On registering ratification of the Convention in 1961, the Peruvian State accepted certain parts of the Convention and availed itself of the temporary exceptions allowed by some of its Articles. The Government also submits that the Private Pensions System introduced in 1992 is not subject to observations under Convention No. 102 since it is an alternative and different system to the one provided for in the Convention. In his statement to the Conference Committee, the Government representative held that the Private Pensions System, in view of its principles and basic characteristics, cannot be understood or analysed within the scope of the Convention.

2. In its conclusion, the Conference Committee shared the opinion that the coexistence in the social security system of both a public and a private scheme, as has been the case in Peru since 1992, is not in itself incompatible with the Convention, which allows the minimum level of social security to be attained through various methods. The Committee shared the concern that the minimum levels of benefit for retirement and invalidity guaranteed by the Convention might not be guaranteed by either the public or the private social security system, though for different reasons.

3. In view of the foregoing, the Committee considers it appropriate to reiterate the terms of its observation of 1996 in which it recalled that, as illustrated in its General Surveys of 1961 and 1989, Convention No. 102 was conceived in a highly flexible manner. It is possible to achieve the same level of social security through various approaches. The Conference deliberately refused to adopt a rigid terminology which would have been ill-suited to the particularly wide range of national solutions, still less to the rapid and constant developments in systems of protection (paragraph 41 of the General Survey of 1989). Nevertheless, the Convention sets forth a number of practical criteria of general applicability for the organization and functioning of social security systems (Articles 71 and 72).

4. Furthermore, the Committee asks the Government to respond to the following points which it already raised in its previous comments. Workers entering the Peruvian labour market for the first time have, in theory, the option of joining one or other of the systems. However, once they have registered with a private pension fund administrator, they can no longer rejoin the system administered by the Insurance Standardization Office (ONP). The Private Pensions System which currently coexists with the public system may end up replacing it. The benefits provided to workers under the Private Pensions System include retirement and invalidity benefits, which are covered by Parts V and IX of the Convention, which have been accepted by Peru.

II. During the discussion in the Conference Committee in June 1997, the Government representative cited the Government's earlier statements to the effect that the maximum amount paid in retirement benefits under the public pensions system was absolutely insufficient and retained no relation to the worker's contributions. The Government representative submitted that the implementation of the Private Pensions System had brought many benefits to the country as a whole, since the savings it had produced had been invested in a number of projects which generated new jobs. He added that according to studies conducted in Peru, it could be predicted that persons affiliated to the Private Pensions System would receive significantly better pensions than those provided by the public system. The Committee asks the Government to include copies of the above studies in its next report, since it does not have the necessary statistical information on the Public Pensions System and the Private Pensions System to settle the matters raised in its comments (observation and direct request).

III. The Committee trusts that the Government will be able to provide a response in its next report to the matters pending in connection with the Private Pensions System as it relates to the following provisions of the Convention:

1. Part V (Old-age benefit, Articles 28 and 29, paragraph 1 (in relation to Article 65 or Article 66). The rate of the pensions provided by the Private Pensions System does not appear to be determined in advance, since it depends on the capital accumulated in individual capitalization accounts, and particularly on the earnings from these accounts. The Committee again recalls that, in accordance with Article 29, paragraph 1, in conjunction with Articles 28 and 65, an old-age benefit at least equal to 40 per cent of the reference wage has to be secured to a person protected who has completed, prior to the contingency, in accordance with prescribed rules, a qualifying period which may be 30 years of contribution. The Committee would therefore be grateful if the Government would supply statistical information to enable the Committee to make a full evaluation of the extent to which the old-age benefit, in all cases and irrespective of the type of scheme selected, attains the level prescribed by the Convention. In this connection, the Committee notes that under section 13 of Act No. 26504 of 1995 amending the Health Benefits Scheme, the National Pensions System, the Private Pension Funds System and the structure of contributions to FONAVI, the requirements and conditions were established under which the Private Pensions System could guarantee a minimum pension to its affiliates (resolution No. 484-95-EF/SAFP adopting and amending the Supervisory Standards of the Private System of Pension Fund Administrations, with regard to the award of benefits and the registration of insurance companies). The Committee reminds the Government that it might include information in its next report on the practical effect of the above provisions, in terms of securing to all persons protected who have completed a period of 30 years of contribution a minimum benefit which attains the level prescribed by the Convention (Article 66).

2. Article 30. Please indicate the measures which have been adopted or are envisaged to guarantee the full application of this provision of the Convention (payment of the benefit throughout the contingency) with regard to the "programmed retirement" system, under which monthly withdrawals may be made from the account until the accumulated capital is exhausted, in contradiction with the above Article.

3. Part IX (Invalidity benefit), Article 58. Please indicate how full effect is given to this provision of the Convention (payment of the benefit throughout the contingency or until an old-age benefit becomes payable) in the event of the permanent total invalidity of a worker who has selected the "programmed retirement" system.

4. Part XIII, Article 71, paragraph 1. The Committee notes that the cost of the benefits, certain administrative expenses and certain commissions are paid entirely by the worker who is insured under a Pension Fund Administrator (AFP). Employers' contributions appear to be of a voluntary nature. According to Article 71, paragraph 1, "the cost of the benefits provided (...) and the cost of the administration of such benefits shall be borne collectively by way of insurance contributions or taxation or both in a manner which avoids hardship to persons of small means and takes into account the economic situation of the Member and of the classes of persons protected". The Committee once again requests the Government to indicate the measures which have been adopted or are envisaged to give full effect to the Convention in this respect.

5. Article 71, paragraph 2. The Committee recalls that, under the provisions of the Convention, the total of the insurance contributions borne by the employees protected shall not exceed 50 per cent of the total of the financial resources allocated to the protection of employees and their spouses and children. In order to be in a position to assess the effect given to this provision of the Convention, the Committee again requests the Government to provide in its next report the statistics requested in the report form under this Article of the Convention for both the private pensions and health systems and the schemes administered by the public system.

6. Article 72, paragraph 1. The Committee requests the Government to indicate the measures which have been taken or are envisaged, in the context of the Private Pensions System, to give effect to this provision of the Convention which states that, where the administration is not entrusted to an institution regulated by the public authorities or to a government department responsible to a legislature, representatives of the persons protected shall participate in the management, or be associated with it in a consultative capacity, under prescribed conditions.

IV. System of pensions administered by the ONP. The Committee draws the Government's attention to the following points in particular:

1. Part V (Old-age benefit), Article 29, paragraph 2. In its report the Government again states that Legislative Decree No. 25967 of 1992 provides that a worker who has contributed for a period of not less than 20 full years may obtain an old-age pension. In the Government's opinion, the provision of Article 29, paragraph 2, of the Convention cannot apply to Peru's case since the legislation does not envisage a qualifying period of 30 years of contribution or employment for the benefit, as prescribed in Article 29(1)(a). The Committee again notes these statements and recalls that Article 19, paragraph 1(a), refers to the maximum period of contribution, employment or residence which may be taken into account to determine whether the old-age benefit attains the level prescribed in the schedule annexed to Part XI (40 per cent of the reference wage for a standard beneficiary after a period of 30 years of contribution or employment). Paragraph 2(a) sets out an additional obligation under which, where the old-age benefit is conditional upon a minimum period of contribution, a reduced benefit shall be secured to any insured person who has completed a qualifying period of 15 years of contribution or employment. This obligation must be complied with irrespective of the fact that the period taken into account for the calculation of the pension is lower than 30 years. The Committee points out that the qualifying period laid down in the legislation is higher than the 15 year period established in the Convention. In these circumstances, the Committee again asks the Government to take the necessary measures to ensure that persons protected are entitled to a reduced benefit after 15 years of contribution, as provided by this provision of the Convention.

2. Part XI (Standards to be complied with by periodical payments), Articles 65 and 66. (a) The Committee recalls that in its previous comments it was noted that the periodical payments made by the ONP were of an absolutely insufficient nature. It would therefore ask the Government to indicate in its next report the measures taken to guarantee a level of benefit that is in accordance with the provisions of the Convention in the schedule annexed to Part XI, and to provide statistical information on this subject as required by the report form under Articles 65 and 66 (see also point II of this observation).

(b) With regard to the adjustment of the rates of current periodical payments in respect of old age and invalidity, the Government states in its report that the statistics requested are in the process of being compiled by the competent bodies, and that the information will be sent shortly. The Committee notes the foregoing and recalls that for several years the Government has also referred to the possibility of carrying out an actuarial study of the pension and invalidity schemes administered by the ONP. The Committee trusts that the Government will be able in its next report to provide the statistics required by the report form under Article 65 (Title VI) which are necessary to assess the changes in long-term benefits in comparison with fluctuations in the cost of living. The Committee again recalls the importance that it attaches to the revision of the rates of current periodical payments in the case of these benefits, as required by Articles 65, paragraph 10, and 66, paragraph 8.

V. The Committee once again notes the observations made by the Association of Retired Oil Industry Workers of the Metropolitan Area of Lima and Callao. In its report the Government repeats that it is awaiting the decision of the Judiciary on the action brought under the Constitution by the above-mentioned organization. The Committee trusts that the Government will communicate the final court decisions on these cases.

VI. In view of the foregoing, the Committee asks the Government to ensure the full application of Articles 71, paragraph 3, and 72, paragraph 2. The Committee would recall that, under the terms of Article 71, paragraph 3, the State has to accept general responsibility for the due provision of social security benefits and take all measures required for this purpose, and that in accordance with Article 72, paragraph 2, the State has to accept general responsibility for the proper administration of the institutions and services concerned in the application of the Convention.

VII. Parts II, III and VIII (in conjunction with Parts I, XI, XII and XIII). The Committee notes the information provided by the Government in its report on Convention No. 24 and the adoption of the following new legislation: General Health Act No. 26482 and Act to modernize social security in the area of health, No. 26790 and its implementing regulation, No. 009-97-SA. This legislation establishes health insurance to be funded by the Peruvian Social Security Institute (IPSS) and provides for the participation of the bodies providing health services. The Government states, among other general considerations, that the health services ensured by the social security are complemented by the plans and programmes of these bodies, which include enterprises and institutions of the public or private sector independent of IPSS whose sole purpose is to provide health services based on their own or third party's infrastructure supervised by the superintendency of the bodies providing health services. According to the Government, the objective of these measures is not to privatize social security, but to permit the private sector to become active in this field. Taking into account the important changes introduced by the new legislation, the Committee would like the Government to supply a detailed report containing information on the legislation and practice, together with the necessary statistical data, in respect of each corresponding Article of the Convention, in accordance with the report form.