Dominican Republic pension fund ‘running a huge risk’
Santo Domingo.- “Pension fund running a huge risk in the Dominican Republic,” former National Business Council (CONEP), president Rafael Blanco warned Wed., noting that the danger lies in the fact that the sum is expressed only in Dominican pesos.
“Any devaluation of the peso will depress the volume of the fund. The fund must be invested in real resources and resources that maintain their value regardless of whether the currency is devalued or not,” said Blanco, whose holdings include hotels.
He said the Dominican pension system needs a revamp aimed at increasing quotas, increasing the retirement age and diversifying investments to increase profitability.”Undoubtedly, without a bigger contribution the size of the pensions that we who are contributing will receive, will not have the necessary volume to cover living needs.”
To increase the percentage of contributions, as proposed by the Pensions Superintendence (SIPEN), wages would need to increase, said Blanco Canto.
“We agree 100 percent that there must be a significant wage increase here. But the only way to achieve it is that we once and for all dismantle the issue of the severance pay, which is an onerous burden that is doubled with the contributions that companies make to Social Security,” Blanco said, quoted by listin.com.do.
He said if there’s a 30% increase in wages, pensions would improve at the same rate.
As for the retirement age, the business leader said raising the age from 60 to 65 could increase the volume of the pension amount as much as 40%.
“A 60-year-old is still a child to retire,” Blanco said during the presentation of the economic development program “Honduras 2020.”