Artículos en Inglés
¿How does an AFP work?
Translated by: Rodrigo Samour Calderon
The moment a young man begins his working life he should set aside a minimum part of his salary into an AFP, where, through the years the money will accumulate in hopes that he can have a steady income during the last stage of his life.
He should select the AFP that provides the best short and long-term loans, where the process to complete the paperwork will be indicated. Then he will receive his affiliation card with his personal code to consult his savings statement through various means. Finally, he should present his code to his employer; a simple and easy process.
The current pension system was established in 1998 and is based on a model of individual capitalization, and affiliated workers are proprietors of a savings account where portions of their salary are periodically deposited, alongside contributions matched by their employers; this according to the AFP Confia Website.
Kevin Mejia, Risk Manager of AFP Confia, points out that each person owns an individual account guaranteeing exclusive property over their savings, “I can go to my AFP every month and ask to see my account statement, or request it online and know that my money is there.”
Another great advantage (at least according to Mejia) is that “the money isn’t thrown into a regular account without interest; it is invested to generate a profit, giving it profitability.”
Another advantage Mejia notes is that a person affiliated to an AFP “counts on disability and death insurance; accidents suffered by an affiliated person are insured, and if the affiliated person passes away, his money is passed on to his family members.”
The amount of money quoted monthly varies depending on personal incomes. As of today, men can retire at 60 and women at 55 years of age.