Dominican workers should not cover COVID-19 expenses with their pension funds

The Dominican worker should not cover the economic impact of the country due to the COVID-19 pandemic by using his/her pension funds, but rather should look for more solidary mechanisms to face the resource needs, said INTEC University economist Magdalena Lizardo.

Lizardo stressed that using pension funds should be the last resort since the economic costs of measures to stop the spread of the coronavirus must first be shared among all of society.

“This shock should not make all of its impact on the worker because as a society we have to find more solidary mechanisms to share the costs of this shock. Now, ultimately, there might be the possibility, that some might use those resources. But let’s leave it as a last resort and with a clear and transparent mechanism of how to use it,” she said, answering questions from journalists in an online conference with other INTEC economists.

In this sense, Pavel Isa Contreras highlighted that the funds managed by the Pension Fund Administrators (AFP) belong to the workers” and nobody else, it is fundamentally up to them to decide what to do with those funds” Contreras said.

He explained that the use of these funds has very important macroeconomic implications because not all of them are liquid but invested in securities of the Central Bank and the Ministry of Finance.

Lizardo indicated that by delivering these funds they would be consumed now, but would not be there when the worker needs it for retirement.

She said that today many workers in their 50s and 60s have not accumulated and will not be able to accumulate sufficient resources for their retirement, which according to the law is 360 contributions.

Both economists agree on the need to open a serious dialogue on the use of pension funds.