Observation (CEACR) - adopted 1998, published 87th ILC session (1999)

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

Health care scheme

In its previous comments, the Committee had requested the Government to provide detailed information on the implementation of the new health care system following the adoption of Act No. 26790 to modernize social security in the area of health and of its implementing regulations in Supreme Decree No. 009-97-SA, which entered into force in 1997. The Committee had therefore asked the Government to provide a detailed report giving information on the legislation and the practice with regard to each provision of the Convention. In its report, the Government indicates that, in view of the recent publication of this new legislation, it is unable at this stage to provide information on the implementation of the new system. Moreover, in its report on the Sickness Insurance (Industry) Convention, 1927 (No. 24), the Government sets out a number of general observations. The Committee notes this information and the adoption of Supreme Decree No. 001-98-SA, a copy of which is provided by the Government. The Committee also notes the observations made on 22 May 1998 by the Single Trade Union of Technicians and Specialist Auxiliary Staff of the Peruvian Social Security Institute alleging among other things that the purpose of Act No. 26790 and its implementing regulations is to dismantle social security and the Peruvian Social Security Institute (IPSS) by placing them in the hands of private individuals and foreign capital. In its reply, the Government denies this allegation and emphasizes that it has no intention of privatizing social security in the country, and that the IPSS should be regarded as administering the general scheme and the health care providers (EPS) as an option available to workers.

The Committee recalls that Act No. 26790 to modernize social security in the area of health and Supreme Decree No. 009-97-SA provide for the involvement of the private sector in the area of health care. The health care services provided by the IPSS are complemented by the health care plans and programmes of the health care providers (EPS). The latter can be public or private enterprises or institutions independent of the IPSS whose sole purpose is to provide health care services through their own infrastructure or third-party facilities. In this new system, workers who are members of private health care programmes will receive cash medical benefits from the IPSS in the event of serious illness and from their health care provider (or their employer's own health care services) for routine ailments. Employers providing health care, either through an EPS or through their own services, are given a credit for the amount of their contributions to the IPSS (sections 15 and 16 of the Act). The Act in principle guarantees that workers may freely choose whether to join the IPSS or an EPS (section 15 of Act No. 26790 and sections 46, 50, 51 and 52 of Supreme Decree No. 009-97-SA).

Given the fundamental changes made by the new legislation in the area of health care, the Committee once again expresses the hope that the Government will provide detailed information in its next report on the legislation and the practice with regard to each of the Articles of the Convention, in accordance with the report form. While awaiting this information, the Committee wishes to draw the Government's attention to the following points.

Part II (Medical care), Article 10 of the Convention (in conjunction with Article 8). Section 12 of Supreme Decree No. 009-97-SA specifies that curative medical care must include both out-patient and hospital in-patient medical care, medication, prostheses, necessary orthopaedic appliances and rehabilitative services. As regards maternity benefits, they should cover care during pregnancy, confinement and the postnatal period. Under section 9 of Act No. 26790 and sections 11 and 20 of the above Supreme Decree, the benefits provided may not be inferior in scope to the minimum health plan set out in Annex 2 of the Supreme Decree, read in conjunction with Annex 3. Care comes under either simple cover (capa simple) or complex cover (capa compleja). Simple cover includes the most frequent and least complex types of medical treatment and is described in Annex 1 of the Supreme Decree. This simple cover is paid for either by the IPSS or by enterprises, through their own services or through health care plans contracted with an EPS. Complex cover is provided by the IPSS (section 34 of the Supreme Decree). Moreover section 90 of the Supreme Decree describes how in practice the responsibilities are to be apportioned between the EPS and the IPSS.

The Committee hopes that the Government will provide detailed information on the implementation of the above-mentioned provisions of the Act and of the Supreme Decree so as to allow it better to assess the application in practice of Article 8 of the Convention, according to which contingencies covered must include any morbid condition, and Article 10 of the Convention, which specifies the nature of medical benefits which must be provided. In this regard, the Committee also hopes that the Government will indicate which provisions govern the domiciliary visits by general medical practitioners provided for in Article 10, paragraph 1(a)(i). Finally, the Committee hopes that the Government will provide with its next report examples of insurance policies concluded with an EPS, and specimens of membership forms.

Part II (Medical care), Article 9, Part III (Sickness benefit), Article 15, and Part VIII (Maternity benefit), Article 48. The Committee hopes that the Government will provide detailed information on the geographical coverage of the new health care system in respect both of the IPSS and of the EPS, and indicate the regions in which the EPS have not yet been established.

Part XIII (Common provisions) (in conjunction with Parts II, III and VIII), Article 71. The Committee notes the establishment of the Superintending Board of health care providers (SEPS) which is responsible for authorizing, regulating and supervising the activities of the EPS and for ensuring the correct use of the funds managed by those bodies (section 2(d) of the aforementioned Supreme Decree). The SEPS is a decentralized public health body financed by levies from the bodies subordinate to it. The Committee hopes that the Government will provide detailed information on the manner in which the SEPS carries out supervision in practice, including copies of any inspection reports or other relevant official documents. In this regard, the Committee notes that, under section 2 of the Act, and sections 2(a) and 3 of the Regulations, the IPSS is responsible for administering social security in the field of health care. The Committee would like the Government to clarify the manner in which the IPSS carries out this mandate, in particular with regard to the EPS.

The Committee also hopes that the Government will indicate whether, when the new system of social security in the field of health was established, any actuarial studies were undertaken into the financial viability of the participant bodies, in particular the IPSS which will continue to bear responsibility for the longer-term and more complex cases of illness. If such studies were carried out, the Committee requests the Government to provide copies of any such studies. Studies of this kind appear to be all the more necessary given that enterprises which provide health care through the intermediary of the EPS or through their own services are entitled to a credit for workers' contributions equal in principle to 25 per cent of those contributions (sections 15 and 16 of the Act). The Committee hopes further that the Government will provide information on the manner in which the controlling authority will supervise the implementation in practice of the minimum health care plans, both by the EPS and employers' own health care services.

Article 72. The Committee hopes that the Government will provide detailed information on the participation of protected persons in the administration of the system, particularly in the EPS and employers' health care services. It also hopes that the Government will indicate whether persons protected are represented on the management boards of the SEPS.

Pensions scheme

I. Private pensions system

The Committee takes note of the Government's reports. It also notes the adoption of Supreme Decree No. 054-97-EF of 13 May 1997 approving the single ordained text of the Act respecting the private system of administration of pension funds. In its report the Government reiterates that the private pensions system cannot be examined within the scope of Convention No. 102. The Government refers to the conclusions of the Conference Committee on the Application of Standards, which in June 1997 agreed that the coexistence within 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, since the Convention allows the minimum level of social security to be maintained through various methods. The Government also draws attention to the flexibility of Convention No. 102, which allows various approaches to attaining the same level of social security in order to take into account the wide range of national solutions and the rapid and constant developments in systems of protection. The Government points out that the national pensions system and the private pensions system were designed to coexist.

The Government indicates that workers entering the Peruvian labour market for the first time have, in principle, the option of joining one or other of the systems. However, the Committee notes that, in the event a worker who has not subscribed to the private pensions system starts work, the employer is obliged to sign him up with the Pension Fund Administrator (AFP) of his choice, unless the worker indicates in writing within ten days that he wishes to join or remain in the National Pensions System (section 6(2) of Supreme Decree No. 054-97-EF). The Committee once again recalls that workers registered with an AFP can no longer rejoin the system administered by the Insurance Standardization Office (ONP). The Committee therefore considers that, in practice, the private pensions system which coexists with the public system may eventually replace it.

The Committee agrees that Convention No. 102 was conceived in a highly flexible manner and that it is possible to achieve the same level of social security through different approaches, the Conference having deliberately refused to adopt a rigid terminology. Nevertheless, the Convention embodies certain principles of general applicability for the organization and functioning of social security systems (Articles 71 and 72 of the Convention). In order to allow it to assess how effect is given to these principles and to other provisions of the Convention, the Committee again urges the Government to indicate in its next report how the questions set out below, which have been raised for a number of years, have been resolved.

1. Part V (Old-age benefit), Articles 28 and 29, paragraph 1 (in conjunction with Article 65 or Article 66). The Committee recalls that 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 takes note of the statistical data provided by the Government in September 1998 on the pensions adjustment factor and the monthly average pension per member; this data are not, however, sufficient to allow the Committee to assess the effect given to the Convention. The Committee once again recalls that, under Article 29, paragraph 1, read in conjunction with Articles 28 and 65 or 66, an average 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 provide statistical data as requested in the report form, such as to allow it to make a full evaluation of the extent to which the old-age benefit, in all cases and irrespective of the type of system selected, attains the level prescribed by the Convention.

The Committee takes note of the seventh and final provision of Supreme Decree No. 054-97-EF which provides that the requirements and conditions such as to allow the private pensions system to guarantee a minimum retirement pension for its members shall be established by a Supreme Decree approved by the Ministry of Economics and Finance. The Committee recalls in this regard that Article 66 of the Convention can be applied within the framework of a private pensions system provided that the minimum old-age benefits payable to a standard beneficiary with 30 years of contribution are not less than the minimum amount required by the Convention (40 per cent of the wages of an ordinary adult male unskilled labourer within the meaning of paragraphs 4 and 5 of this Article). The Committee would therefore be grateful if the Government in its next report would provide a copy of the Supreme Decree adopted in implementation of the above-mentioned final provision of Supreme Decree No. 954-97-EF, as well as statistical information required by the report form.

2. Article 30. The Committee again requests the Government to indicate the measures adopted or 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, contrary to the above Article. In this regard, the Committee also refers to its comments on the application of Article 4 of the Old-Age Insurance (Industry, etc.) Convention, 1933 (No. 35).

3. Part IX (Invalidity benefit), Article 58. The Committee again requests the Government to indicate how full effect is given to this provision of the Convention (provision 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 (Common provisions), 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 an 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 should 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 the persons protected". The Committee once again requests the Government to indicate the measures which have been adopted or envisaged to give full effect to the Convention in this respect.

5. Article 71, paragraph 2. The Committee again recalls that, under this provision 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.

II. System of pensions administered by the ONP

The Committee again draws the Government's attention to the following specific points.

1. Part V (Old-age benefit), Article 29, paragraph 2(a). In the report received in September 1998, the Government acknowledges that Peruvian law does not envisage a case of the kind described in this provision. The Committee recalls that Article 29, paragraph 2(a), provides that, 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. The Committee again 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 can only ask the Government once again 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 (Calculation of periodical payments), Articles 65 and 66. The Committee notes the declaration of the Government according to which the maximum amount of the old-age pension paid by the National Pensions System is insufficient and is not proportionate to the workers' contributions. It also notes that, as of 1 January 1997, contributions to the National Pensions System will be not less than 13 per cent of the total insurable income of each worker. In addition, a National Public Savings Fund has been established, profits from which will be used to pay benefits to pensioners whose total monthly pensions do not exceed 1,000 new soles. The Committee hopes that the Government will be able to go on providing information on the measures taken or envisaged to increase the pensions paid by the National Pensions System so as to reach the level prescribed by the Convention. The Committee further requests the Government to provide all statistics required by the report from under Article 65 or 66, including statistics on the review of long-term benefits to take account of changes 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 long-term benefits, as required by Article 65, paragraph 10, and Article 66, paragraph 8.

III. Supervision of the private and public pensions systems

In its report, received in September 1998, the Government indicates that the State assumes overall responsibility for matters relating to the provision of benefits and takes any measures required for this purpose and for ensuring sound administration of institutions and services involved in implementing the Convention. The Committee would be grateful if the Government would indicate the specific measures adopted to apply Article 71, paragraph 3, and Article 72, paragraph 2, with regard both to the private and public pensions systems. In this context, the Committee recalls the importance of the regular actuarial studies and calculations required by Article 71, paragraph 3.

As regards the private system, the Committee takes note of the fact that, in accordance with section 23 of Supreme Decree No. 054-97-EF, investments made by the AFP are required to generate a certain minimum level of profits. Moreover the Government is responsible for determining criteria of minimum profitability (guaranteed by the statutory reserve formed from the AFP's own funds and other sources). The Committee would be grateful if the Government would also indicate in its next report all the measures taken to ensure the minimum level of profits generated by the AFP for its members and provide a copy of the Supreme Decree approved by the Minister of Economics and Finance.

IV. Participation of persons protected in the administration of the system

1. The Committee again 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 Article 72, paragraph 1, of the Convention, according to which, where the administration is not entrusted to an institution regulated by the public authorities or to a government department responsible to the legislature, representatives of the persons protected shall participate in or be associated with the management, in a consultative capacity, under prescribed conditions. In this context, the Committee refers to information supplied by the Government in its report on the application of Convention No. 35, and trusts that the Government will indicate any new measures taken to allow the participation by the persons protected in the administration of the Private Pensions System.

2. The Committee requests the Government to indicate the manner in which representatives of the persons protected participate in the management of the pensions system administered by the ONP, and in particular whether they are represented on the management bodies of the ONP.

V. The Committee recalls the observations received from the Association of Retired Oil Industry Workers of the Metropolitan Area of Lima and Callao and notes the Government's statement to the effect that no authority can take up cases that are still before the courts or interfere with the work of the courts. The Committee refers to its previous comments and trusts that the Government will in due course provide copies of any final judicial decisions on cases brought in connection with the observations made by the Association of Retired Oil Industry Workers of the Metropolitan Area of Lima and Callao.

VI. While fully aware of the complexity of the issues raised, the Committee trusts that the Government, if it deems appropriate, will seek advice and assistance from the competent services of the Office on the organization and working of the public and private social security systems in the area of health care. The Committee trusts the Government will redouble its efforts to provide the information requested in the present observation and in the direct requests for 1997 and 1998.

[The Government is asked to report in detail in 2000.]