As authorized by the National Congress, the Ministry of Finance withdrew US$ 1,576 million from the Pension Reserve Fund (PRF) in early October.
The objective of the PRF is to support the financing of fiscal obligations derived from state guarantees of basic old-age and disability solidarity pensions, as well as solidarity pension contributions. In this way, the financing of future contingencies related to pensions is complemented.
According to the Fiscal Responsibility Law, the amount of resources that can be withdrawn annually from the PRF may not exceed one third of the difference between the total expenditure that corresponds to be made each year for the payment of the pension obligations in the respective year and the total expenditure made for said item in 2008, the latter updated annually according to the variation experienced by the Consumer Price Index. Thus, during the years 2017, 2018 and 2019, US$ 313.95 million, US$ 525.05 million, and US$ 576.51 million, were withdrawn respectively.
In the context of the pandemic, Law N° 21,227, which empowers access to unemployment insurance benefits of Law N° 19,728 in exceptional circumstances, established in Article 19 that, without prejudice to the provisions of Article 8 of the Fiscal Responsibility Law, the amount of resources that will be withdrawn from the PRF during the years 2020 and 2021 will correspond to the total of the difference between the total expenditure that correspond to be made each year for the payment of the pension obligations in the respective year and the total expenditure for the item in 2008, adjusted for inflation. These expenditures were estimated at US$ 1,576 million for 2020, equivalent to the amount withdrawn.
It should be noted that according to what is set forth in law N° 21,225, which established measures to support families and micro, small and medium-sized enterprises due to the impact of the COVID-19 disease, no contributions will be made to the Pension Reserve Fund in 2020 and 2021.
At the end of August 2020, the market value of the PRF was equivalent to US$ 11,436 million. Considering that US$ 1,576 million were withdrawn at the beginning of October, the PRF is estimated to reach US$ 9,600 million by the end of 2020.
The amounts withdrawn from the PRF will be auctioned through the modality implemented as of April of this year.