Survivors' Insurance (Industry, etc.) Convention, 1933 (No. 39) - Peru (Ratification: 1945)

Individual Case (CAS) - Discussion: 1996, Publication: 83rd ILC session (1996)

A Government representative stated that the observations made by the Committee of Experts to the effect that the private pension system in Peru violated certain aspects of Conventions Nos. 35 to 40 referred in particular to the "programmed retirement" method of old-age insurance, the financial contributions of employers and the State, the constitution of the resources of the insurance scheme, its administration and the participation of insured persons in its management. Article 11 of the Constitution of Peru provided for the coexistence of a public and a private pension system based on the fundamental concept of the freedom of workers to select the system that was most appropriate for them. Convention No. 35, which had been adopted in 1933 and had been ratified by Peru in 1945, envisaged an arrangement in which there only existed a public pension system. The private pension system responded to a new trend that was prevalent at the present time and envisaged the provision of pensions that were directly related to the contributions made and their financial return from safe investments that were supervised by the State, thereby guaranteeing insured persons a sufficient level of pension benefits in accordance with the economic situation of the worker. This private system was controlled by the State through the Superintendence of Private Administrations of Pension Funds. She emphasized that there was no linkage between the investments made with workers' contributions and the capital of the private enterprise administering the system, so that if the latter became insolvent the fund that it administered would not be affected and the payment of pensions to insured persons would not be jeopardized. In such an eventuality, the fund would be managed by another administrator.

She emphasized that under the public pension system the maximum benefit paid in respect of retirement was absolutely insufficient and retained no relation to the contributions made by workers. She then referred to the "programmed retirement" method, which was merely one of the four alternatives offered to workers by the private system. The maximum amount that could be paid currently amounted to approximately 600 soles (approximately 250 dollars). The regulations governing the private pension system provided that the retirement option could be revoked and substituted by any of the other three schemes, which provided a reasonable level of protection.

She then referred to the criticism made by the Committee of Experts that employers made no financial contribution to the constitution of the resources accumulated for the payment of pensions and that the contributions were paid exclusively by workers. This was not the case, since employers evaluated gross remuneration while workers took into account net earnings. Employers therefore calculated remuneration which included taxation and contributions paid by them and by the worker, since they knew that the worker's principal interest was the amount that would be received in the end for the services rendered. It was for this reason that the non-contribution of employers to the private system was no more than an apparent reality because the cost of the worker's contribution was taken into account when determining the wage which constituted the major part of the employment contract. Before the introduction of Act No. 26504 of July 1995, the system of contributions in the social security scheme was tripartite: the employers paid 6 per cent, the workers 3 per cent and the State 1 per cent. Today, the workers paid the totality of the amount to the pension scheme but they no longer had to pay for health insurance, the cost of which was totally assumed by the employer. Therefore, even if the Committee of Experts had been correct concerning the non-contribution of employers to the private pension system, that would be compensated by the contributions paid solely by employers to the health scheme of the social security system.

As regards the participation of the State in the private system, this was inconsistent and contrary to the nature of the system itself. The speaker stated that a public pensions system together with the private system was better suited to the concept of the free choice of the worker. This possibility had not been envisaged by Convention No. 35 due the historical circumstances surrounding its adoption.

She emphasized that no provision in the relevant Conventions prevented the coexistence of different insurance systems. Indeed, the State had established compulsory old-age and invalidity insurance, which was governed by Legislative Decree No. 19.990, the National Pension System Act.

Finally, she expressed concern that this type of observation was being made at a time when the Governing Body had approved the recommendation by the Committee on Legal Issues and International Labour Standards to the effect that, among others, Conventions Nos. 35, 36, 37, 38, 39 and 40, which had given rise to the observation by the Committee of Experts, should be shelved. The Government believed that for the above-mentioned reasons, it would be released from the observations made and trusted that the Governing Body would adopt the measures to ensure that it complied with the proposal it had made about the above-mentioned Conventions because they were obsolete and had very few ratifications.

The Workers' members pointed out that these Conventions all focused on matters of social security. The case of Peru was important because the reforms undertaken had a major impact on the entitlement to pension rights. Similar reforms had been introduced in Chile and in other countries in the Latin American region. The reforms in Peru derived from experiments in new forms of social security management, particularly privatization, which raised problems, as noted by the Experts. The Workers' members stressed that these programmes and systems had been established in the first place in order to provide security to those who were aged, dependent or infirm. They were amongst the least able to support themselves. Decisions to make substantial reforms should consider these most vulnerable citizens first and not acquiesce to financial pressures. While there was still time to consider and prevent changes in Peru, certain changes had already taken place. Those changes revolved around the option of electing for "programmed retirement". The Government claimed that this option could be revoked and a lifetime personal or family annuity could be substituted. But, as noted by the Experts in their report, those who opted exclusively for the "programmed retirement" pension method lost all entitlement to a pension when the accumulated capital in their individual account was exhausted.

Moreover, employer contributions to the pension plan needed to be clarified under Article 9, paragraph 1, of Convention No. 35. In addition, the management of the social security system by private firms ought not to be conducted with a view to profit. Consequently, the Government should be urged to report on measures which had been adopted to ensure that pension funds avoided the risks involved in private management. Thus, it would be wise to require Peru to review what it had begun to do and provide information thereon to the Committee. Finally, Peru should ratify Convention No. 102.

The Employers' members stated that this new approach to old-age insurance had already been discussed in previous years in this Committee in relation to another country. There was no doubt that this approach violated certain provisions of Convention No. 35 which covered the issue as to how people who had worked hard all their lives could make sure they had an adequate source of income when they stopped working. The issue here was which system worked best. In this context, it had to be pointed out that Convention No. 35 had been ratified by only 11 member States. In view of this, it was to be wondered whether it might not be a good idea to look favourably at other systems. Under the terms of Article 1 of the Convention, member States were obliged to institute a compulsory old-age insurance which provided for terms which were at least equivalent to those provided for in the Convention. As a result, if a new old-age insurance system could be set up which was as good as the old one, or perhaps even better, then the Employers' members saw no reason not to investigate the new approach to old-age insurance even if it did not comply with every detailed provision in Convention No. 35. For the time being, it could be said that there were two systems prevailing in Peru: one was the old system which complied with the Convention and the other was the new system which was somewhat complementary. The Government could thus claim that, as long as people had the option of joining the new system but could also stay with the old system, there was compliance with the Convention. In any event, these matters had already been discussed previously and the Committee had stated in 1995 that Convention No. 35 needed to be revised. The Employers' members trusted that the Committee would not forget its recommendation.

The Workers' member of Spain stated that the report of the Committee of Experts referred to a number of violations of Convention No. 35. The first of these was very serious, as it implied the possibility that a worker could be without a pension and therefore without any means of subsistence at a stage in life when it was no longer possible to work. Workers could not be deprived of their rights merely on the grounds that they lived longer than expected. Another violation related to cases in which employers were not under the obligation to make financial contributions to the system. This was undermining a fundamental principle of the Convention, namely the obligation placed upon workers and employers to contribute to the old-age insurance system. A further violation concerned the participation by the State in the financing of old-age schemes. In this respect, the necessary measures should be adopted to give full effect to Article 4, paragraph 9, of the Convention. Other problems also arose in relation to the application of Article 10 of the Convention concerning the administration of the insurance scheme, which should not be conducted with a view to profit. Moreover, representatives of insured persons had to participate in the management of insurance institutions. Finally, he pointed out that Convention No. 35 was based on principles that were also set out in the Social Security (Minimum Standards) Convention, 1952 (No. 102).

The Employers' member of Peru stated that the pension system established in 1992 had permitted a total transformation of the social security system, without any prejudice to the public system. Indeed, it had developed the spirit in which Convention No. 35 and the Social Security (Minimum Standards) Convention, 1952 (No. 102), had been adopted. The private pension system in Peru was adapted to the fundamental principles of modern social security.

He recalled that the Convention had been adopted more than 65 years ago in an international context that was totally different from the present. At that time the State had held all the power and had been responsible for guaranteeing social protection. It had placed no trust in the market and it had therefore been inconceivable that it could establish a successful private social security system. He believed that pension funds could be administered by economically active enterprises. He noted that the ILO Working Party on the Policy regarding the Revision of Standards had considered the possibility of shelving a number of Conventions, including Conventions Nos. 35 to 40.

The Employers' member of Chile noted the experience of his country showed that the income of pension funds belonged to those insured under the scheme. The profitability of funds was to the exclusive benefit of their members, namely the insured persons.

The Workers' member of Argentina recalled that the Committee should remain the moral conscience of the Conference. The case which was being examined, as well as the five observations contained in the Experts' report, incited one to reflect on this new system of social security which was surrounded by a great deal of uncertainty. The practices concerned also reflected other Latin American countries.

It was indicated in the Experts' report that the employers did not contribute to the financial resources of the insurance scheme, that the funds were being managed by private enterprises, that insured persons did not participate in the administration of the insurance scheme and that it was difficult to guarantee to everyone an old-age pension for the whole period of contingency. The Committee should take a clear position so that the provisions of Conventions Nos. 35 to 40 were applied including in the private system. It would be regrettable if social protection, social dialogue and the role of the State could be called into question and the social security system progressively dismantled.

Another Government representative of Peru recalled that Peru had indeed ratified the Social Security (Minimum Standards) Convention, 1952 (No. 102). In contrast with the other countries in Latin America, it authorized the coexistence of two schemes, one of which was private and the other public. The latter was strictly in conformity with Conventions Nos. 35 to 40. As a result, the workers freely selected the scheme under which they wished to be insured.

Only experience could show which system functioned best. It had been demonstrated that after 40 years of existence the public system in Peru had been a real disaster and was collapsing after having been the weak point of successive governments. Moreover, a number of governments had used their resources for inadmissible expenses.

The Government's current principal concern was the protection of workers. The management of the investment funds of insurance schemes for workers was controlled by the State through the Superintendence of Private Administrations of Pension Funds, this latter body having the possibility of requesting that an administrator refrain from managing in case of unsatisfactory results. Although under this system pension funds were administered by profit-making companies, they acted in the interests of the workers.

Convention No. 35 had only been conceived with a view to a single public system. However, the instrument did not in any way prevent the establishment of an insurance system other than the public system, in contradiction to what appeared to be said in some of the observations of the Committee of Experts.

The Workers' members indicated that the Government representative of Peru was quite right in stating that there was nothing that prohibited countries from having more than one pension system. However, what they were concerned about was a situation whereby people opted for a private programme in lieu of a government programme. Otherwise, they had no problems with a private system supplementing a public system. They were worried, like the Experts, about those persons who would opt exclusively for the "programmed retirement" pension which meant that they could lose all entitlement to a pension if the accumulated capital in their individual account was exhausted. This was a serious issue and therefore the Government should be asked to provide information on measures envisaged to make sure this did not happen.

Another Government representative of Peru added that, after its experience of the failure of the public insurance system, Peru had tried a new system, while still maintaining the public system, which allowed workers to freely select the formula that they preferred. This reform had been introduced after a period where, after having contributed for 30 or 40 years, a worker had no right to expect a pension superior to the sum of 250 dollars provided for by the public system.

The "programmed retirement" method was only one of the four options available to workers. Furthermore, workers who opted for this formula could always come back upon their decision and receive a pension.

Finally, he considered it paradoxical that his country should be criticized concerning the private insurance scheme at a time when it had maintained its public system in accordance with the Convention, which had only been conceived with a view to a single system. Ideas in this respect were changing and, taking this into account, the Governing Body had approved a proposal to shelve this series of Conventions.

The Committee noted the statements made by the Government representatives and the ensuing discussion and recalled the discussions on Convention No. 35 which had taken place in 1994. The Committee observed that the Committee of Experts noted in its comments that the private pension system did not make it possible to ensure the application of Conventions Nos. 35 to 40 on the following points: the payment of a pension during the whole period of the contingency, the financial contribution of employers to the resources of the insurance scheme, the financial participation by the public authorities, the administration of the insurance scheme and the participation by insured persons in the management of insurance institutions. Moreover, the Committee recalled the decision of the Governing Body at its 265th Session in March 1996 that Conventions Nos. 35 to 40 should be shelved with immediate effect and member States which had ratified Conventions Nos. 35 to 40 were requested to envisage the possibility of ratifying the Invalidity, Old-Age and Survivors' Benefits Convention, 1967 (No. 128) and denouncing the former Conventions. The Committee recalled that, when Convention No. 35 had been discussed in connection with another country in 1995, it had considered that this Convention needed to be revised. The Committee finally asked the Government to continue to supply the information, as requested by the supervisory bodies, so that they would be in a position to assess developments in the coming years.

Direct Request (CEACR) - adopted 2009, published th ILC session ()

Please refer to the comment made under the Social Security (Minimum Standards) Convention, 1952 (No. 102).

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

With reference to its previous comments, the Committee notes the Government's report, in which it repeats the information provided in its report on the application of Convention No. 35. In these circumstances, the Committee refers to its observation on Convention No. 35, in relation to the following provisions of Convention No. 39.

1. Article 12, paragraph 1, of the Convention. Contribution of employers to the financial resources of the insurance scheme. See under Convention No. 35, Article 9, paragraph 1, as follows:

Article 9, paragraph 1. Financial contribution of employers to the resources of the insurance scheme. In its previous comments, the Committee had requested information on the measures which have been adopted or are envisaged to supplement Legislative Decree No. 25897 of 27 November 1992 to ensure that employers contribute to the financial resources of the insurance scheme for wage-earners. The Government states in its report that sections 29 and 31 of Presidential Decree No. 054-97-EF permit dependent workers and self-employed workers, as well as employers, to make voluntary contributions. These employers' contributions are not subject to a ceiling. The Committee considers it useful to recall that Article 9, paragraph 3, of the Convention includes a flexibility clause with a view to taking into account the situation of certain national insurance schemes which provide compulsory coverage of the whole of the active population. Since the coverage of persons who are not employees by the private pension system is only optional, employers should be obliged to contribute to the financial resources for the compulsory insurance scheme, in accordance with Article 9, paragraph 1, of the Convention. The Committee is therefore bound to urge the Government to take the necessary measures to ensure that employers also contribute to the financial resources of the pension insurance scheme, in accordance with this provision of the Convention.

2. Article 12, paragraph 4. Financial participation by the public authorities. See under Convention No. 35, Article 9, paragraph 4, as follows:

Article 9, paragraph 4. Financial participation by the public authorities. The Committee once again notes the Government's statement to the effect that, in accordance with the provisions of the Single Codified Text of the Act respecting the private pension fund administration system, adopted under the above Presidential Decree No. 054-97-EF, the State contributes to the financial resources for insured persons by issuing vouchers. These vouchers are issued by the Insurance Standards Office to an amount corresponding to the benefits of workers in relation to the months of their contributions to the national pension system. The Government adds that the contribution of the public authorities to the financial resources or the benefits of insurance schemes would involve a cost that the Peruvian economy does not have the capacity to bear at present. The Committee once again notes that the above vouchers represent the recognition of the rights acquired under the national pension system by insured persons who opt to be insured under the private pension system, but that they do not appear to fully constitute a contribution by the public authorities to the financial resources or to the benefits of insurance schemes, within the meaning of this provision of the Convention. Although aware of the difficulties to which the Government refers, the Committee is bound once again to hope that the necessary effort will be made to adopt measures which give full effect to this provision of the Convention.

3. Article 13, paragraph 1. Administration of the insurance scheme. See under Convention No. 35, Article 10, paragraph 1, as follows:

Article 10, paragraph 1. Administration of the insurance scheme. The Government once again states that the public authorities, through the Superintendence of Private Pension Fund Administrations (SAFP), constantly evaluates pension funds with a view to preventing any risk that may be involved in private management by a limited liability company. According to the Government, the requirement to be a limited liability company to constitute a pension fund administration responds simply and exclusively to questions of an operational nature, but not related to profit. The Committee points out that, in accordance with section 14 of Presidential Decree No. 054-97-EF, before pension fund administrations initiate operations in the public sphere, they have to have shares representing their assets registered in the stock market. In this respect, the above provision of the Convention requires that the institutions which administer insurance schemes shall not be conducted with a view to profit, which is not in conformity with the nature of limited liability companies registered on the stock market, as is the case of pension fund administrations. The Committee therefore once again requests the Government to indicate in its next report the manner in which it ensures that pension fund administrations are not conducted with a view to profit, as required by this provision of the Convention. Please also indicate whether occupational organizations have formed pension fund administrations or participated in their share capital, and provide information on their operations.

4. Article 13, paragraph 4. Participation by insured persons in the management of insurance institutions. See under Convention No. 35, Article 10, paragraph 4, as follows:

Article 10, paragraph 4. Participation by insured persons in the management of insurance institutions. (a) The Government reiterates that the participation by the representatives of insured persons in the management of insurance institutions currently finds expression in their freedom to be insured under a specific pension fund administration. The basic principle of the freedom to participate is observed through the opportunity available to insured persons to maintain or transfer their insurance funds to a pension fund administration which appears most suitable to them and with which they feel best represented. The Government adds that this will not prevent standards from being issued in the near future, allowing greater participation by insured persons or their representatives in the administration of pension fund administrations. The Committee recalls that the freedom to choose a pension fund administration is not sufficient to comply with the requirement of the participation of insured persons in the administration of insurance institutions, as required by this provision of the Convention. It would therefore be grateful if the Government would adopt the necessary measures to give effect to this provision of the Convention in the framework of the private pension system and if it would provide copies of the new provisions adopted in this respect.

(b) The Committee requests the Government to indicate the manner in which the representatives of the persons protected participate in the management of the pension system administered by the Insurance Standards Office (ONP), and in particular if they are represented on the ONP's internal bodies.

5. The Committee once again notes that persons who opt exclusively for the "programmed retirement" method lose any entitlement to a pension when the capital accumulated in their individual account is exhausted. It therefore urges the Government to take measures to guarantee that all insured persons, and particularly those who have opted for the "programmed retirement" method (and do not exercise their right to change to another method), are provided with the survivors' benefit envisaged in the Convention during the whole period of the contingency.

6. The Committee notes the provisions of Presidential Decree No. 054-97-EF respecting the administration of the invalidity and survivors' branches by pension fund administrations and insurance companies and would be grateful if the Government would include in its next report information on the application of these provisions in practice, and particularly concerning the single premium which must be paid by insured persons to the insurance company under section 52 of Presidential Decree No. 054-97-EF.

7. Finally, the Committee recalls that in March 1996 the Governing Body invited States parties to Convention No. 39 to examine the possibility of ratifying the Invalidity, Old-Age and Survivors' Benefits Convention, 1967 (No. 128), which will automatically result in the denunciation of Convention No. 39. The Committee would be grateful if the Government would provide information in its next report on the consultations held with the social partners and the decision made in this respect.

Observation (CEACR) - adopted 1995, published 83rd ILC session (1996)

With reference to its 1994 observation and direct request, the Committee notes the Government's report and in particular the information provided concerning Articles 3, 4, 5, 6 and 11 of the Convention. The Committee would be grateful if the Government would provide information in its next report on the manner in which it intends to give full effect to the following provisions of the Convention in the context of the private system for the administration of pension funds (SPP), taking into account the comments that it has made in this respect in its observation on the similar provisions of Convention No. 35.

1. Article 12, paragraph 1 (contribution of employers to the financial resources of the insurance scheme). See under Convention No. 35, Article 9, paragraph 1, as follows:

Article 9, paragraph 1 (financial contribution of employers to the resources of the insurance scheme). The Committee requested the Government to indicate the measures which had been adopted or were envisaged to supplement Legislative Decree No. 25897 of 27 November 1992 so that employers contribute to the financial resources of the insurance scheme for wage-earners. The Government states in this respect that the private pensions system can receive the financial participation of employers due to the fact that for a worker to join the system there has to be an automatic increase in remuneration of the order of 13.54 per cent to cover membership of the private system for the administration of pension funds (SPP). The Committee notes that the above increase in remuneration for workers is provided once only at the time when the worker joins the SPP. Moreover, this increase, envisaged under section 8 of Legislative Decree No. 25897, was repealed by the recent amendments made by Act No. 26504, of 8 July 1995.

2. Article 12, paragraph 4 (contribution by the public authorities). See under Convention No. 35, Article 9, paragraph 4, as follows:

Article 9, paragraph 4 (financial participation by the public authorities). The Government states that section 9 of Legislative Decree No. 25897 provides for vouchers to be issued by the Peruvian Social Security Institute (IPSS) recognizing the corresponding amount of the entitlements of the worker, taking into account the months of contribution to that institution up to the coming into force of the Act (that is, up to 6 December 1992). It adds that regulations have been issued establishing guidelines on the emission of vouchers. The Committee notes that the above vouchers constitute recognition of the entitlements acquired in the National Pensions System (SNP) by insured persons who opt to join the SPP, but that they do not appear to fully constitute a contribution by the public authorities to the financial resources or to the benefits of insurance schemes, in the sense set out in this provision of the Convention. The Committee is bound to hope that the necessary measures will be adopted to give full effect to this provision of the Convention.

3. Article 13, paragraph 1 (administration of the insurance scheme). See under Convention No. 35, Article 10, paragraph 1, as follows:

Article 10, paragraph 1 (administration of the insurance scheme). The Government states that the public authorities, through the Superintendence of Private Administrations of Pension Funds (SAFP) constantly evaluates pension funds with a view to preventing any risk that may be involved in private management by a limited liability company. The Committee notes that the above provision of the Convention requires that the institutions which administer the insurance scheme shall not be conducted with a view to profit, which is not the case of the limited liability companies which administer pension funds. In this respect, the Committee requests the Government to supply information in its next report on the measures which have been adopted to ensure that the pension funds avoid the risks involved in private management by a limited liability company and that they are not conducted with a view to profit, as required by this provision of the Convention. Please also state whether, as mentioned to the Conference Committee, trade union organizations have formed an Administration of Pension Funds (AFP) fund or taken out shares in any such fund, and provide information on their functioning.

4. Article 13, paragraph 4 (participation by insured persons in the management of insurance institutions). See under Convention No. 35, Article 10, paragraph 4, as follows:

Article 10, paragraph 4 (participation by insured persons in the management of insurance institutions). The Government states that the participation of workers in the SPP consists of the free choice provided by the system to join a particular fund, since insured persons decide freely whether to maintain or transfer their insurance capital to the fund which appears the most suitable and in which they feel most represented. The Committee notes that the free choice in electing a fund manager is not sufficient to fulfil the requirement of participation of insured persons in the management of insurance institutions set out in this provision of the Convention. It therefore requests the Government to adopt the appropriate measures to give effect to this provision of the Convention in the context of the SPP.

5. The Committee notes that under the terms of section 4 of resolution No. 141-93-EF/SAFP, dated 27 August 1993, survivors' pensions may be paid by the "programmed retirement" method. The Committee notes that persons who opt exclusively for the "programmed retirement" method lose any entitlement to a pension when the capital accumulated in their individual account is exhausted. It therefore trusts that the Government will include information in its next report on the measures which have been adopted to guarantee that beneficiaries who have opted for this method of payment are provided with a survivors' benefit during the whole period of the contingency.

6. The Committee would be grateful if the Government would provide information on the application in practice of the option that may be taken by AFP funds to administer the survivors' contingency by AFP funds or by insurance companies (section 48 of Legislative Decree No. 25897 of 1992).

Direct Request (CEACR) - adopted 1994, published 81st ILC session (1994)

Article 11, paragraph 2(e). In referring to its previous comments, the Committee notes that the Government reiterates its intention to modify section 64(d) of Legislative Decree No. 19990 of 24 April 1973, which provides, contrary to the Convention, that the survivors' pension paid in the framework of the pensions system administered by the IPSS shall not be granted when the beneficiary (other than the widow) receives benefit the amount of which is more than double the minimum wage rate applicable in the place of his/her usual employment. Indeed, such a provision is not in accordance with the Convention to the extent that it refers to benefits granted to orphans of less than 14 years of age.

Consequently, the Committee once again expresses the hope that the necessary measures will be taken to ensure the full application of the Convention.

[The Government is asked to report in detail for the period ending 30 June 1994.]

Observation (CEACR) - adopted 1994, published 81st ILC session (1994)

I. The Committee takes note of the detailed information communicated by the Government in its report, particularly concerning the new pensions system introduced by Legislative Decree No. 25897 on the private system for the administration of pension funds (SPP) of 27 November 1992, as well as by Supreme Decrees Nos. 206-92-EF and 220-92-EF. The Committee also notes the comments of "Centro Union de Trabajadores de Perú IPSS".

The Committee takes note, in particular, that the national social security pensions system administered by the Peruvian Institute of Social Security will continue to be in effect for its present members, unless they opt to be members of the new private pensions system. It also notes that new entrants to the labour market have the option of joining one or the other of the above systems. However, the Committee notes that once they have joined a pension fund administration (AFP), the wage-earners can only rejoin the IPSS national system during a transitional period of two years after the entry into force of the new law, that is to say until 6 December 1994.

Moreover, the Committee notes that the new private pensions system raises a certain number of problems from the point of view of the application of the Convention. As a result it wishes to draw to the attention of the Government the following provisions of the Convention:

1. Articles 3, 4 and 5 of the Convention. The Committee notes that pursuant to section 100, last paragraph, of Supreme Decree No. 206-92-EF, those workers who have contributed without interruption until the month preceding the contingency have the right to survivors' benefit. It would be grateful to the Government if it would indicate in its next report the manner in which it has given effect to the above-mentioned provisions of the Convention.

2. Article 12, paragraph 1 (financial participation of employers). The Committee requests the Government to indicate the measures taken or envisaged to complete Legislative Decree No. 25897 of 27 November 1992 so that employers shall contribute to the financial resources of the insurance scheme for wage-earners, in accordance with this provision of the Convention.

3. Article 12, paragraph 4 (financial participation of public authorities). The Committee requests the Government to indicate the measures taken or envisaged to guarantee, within the framework of the SPP, the contribution of public authorities to the financial resources or to the benefits of the insurance scheme, as provided under this provision of the Convention.

4. Article 13, paragraph 1 (administration of insurance scheme). The Committee requests the Government to indicate the measures taken or envisaged to give effect, within the framework of the SPP, to this provision of the Convention which provides that "the insurance scheme shall be administered by institutions founded by the public authorities and not conducted with a view to profit, or by state insurance funds".

5. Article 13, paragraph 4 (participation of insured persons in the management of insurance). The Committee asks the Government to indicate the measures taken or envisaged to be taken to give effect, within the framework of the SPP, to this provision which provides that "representatives of the insured persons shall participate in the management of insurance institutions under conditions to be determined by national laws or regulations".

6. Finally, the Committee notes that under section 48 of Legislative Decree No. 25897 of 1992 the risks of disability and death can be administered at the choice of the AFP, either by the AFP itself or by the insurance companies. It would be grateful to the Government if it would supply detailed information on the implementation in practice of the above-mentioned section 48.

II. Referring to its previous comments concerning Article 14, paragraphs 2 and 3, the Committee takes note with interest the legal texts communicated at its request by the Government in its report.

[The Government is asked to report in detail for the period ending 30 June 1994.]

Direct Request (CEACR) - adopted 1989, published 76th ILC session (1989)

Articles 12 and 14 of the Convention. See under Convention No. 35, Articles 9 and 11, as follows:

Article 9, paragraph 4 of the Convention. With reference to its previous comments, the Committee takes note of the information concerning the provisions of section 171 of Decree No. 398 and section 169 of Act No. 24767, under which the State contribution to the financial resources of the Peruvian Institute of Social Security (IPSS) is provided for in the Public Sector Budget of the Republic. In addition, the State proposes to make a social security contribution of not less than 1 per cent of the total amount of the insurable remunerations of the previous year, which will be taken into account annually in the General Budget of the Republic and credited to the IPSS, in monthly payments through the Economy and Finance Sector. Section 36 of the new General Act of the IPSS (No. 24786, of 19 December 1987) provides that the payment of the contributions is compulsory in all cases without exception, and that failure to make such payment gives rise to the application of the corresponding sanctions. The Committee requests the Government to continue to provide information on this subject in its future reports.

Article 11, paragraphs 2 and 3. With reference to its previous comments, the Committee notes that if the insured person or his legal representative are not in agreement with the decision of the IPSS granting or denying a benefit, they are entitled to make objection to such a decision through the following procedures: re-examination, appeal and review, which are provided for in the Regulations governing the general norms of administrative procedures, issued by Presidential Decree No. 006-SC-67 of 11 November 1967. Recourse may be had to these procedures only once for each case and never to more than one procedure at a time.

Article 11, paragraph 2(e). The Committee takes note of the detailed information supplied by the Government. The Committee points out that this provision of the Convention does permit suspension of the pension when the beneficiary is in receipt of remuneration, but only where the pension is provided by a special scheme for non-manual workers. Since the national pension scheme, established by Legislative Decree No. 19990, is not a special scheme for non-manual workers in the meaning of the Convention, the suspension provided for by section 64(d) of this Decree is contrary to the Convention. The Committee therefore hopes that the Government will be able to take the necessary measures to give full effect to the Convention on this point.