"Taksimeter is constantly working, and as soon as people start saving, the problem is solved more quickly." Francisco Murillo, Executive Director of Sura Asset Management of Chile, is so stressed when it comes to the pension reform discussed in the Congress.
According to executive authorities, the reform has real incentives, and the pillars on which it is built are real. However, this indicates that there are aspects of the labor market to be considered. "The first point is participation in the labor market. A section that goes between 60 and 65, for example. Women as a second issue, because women's pension is much worse, and this is linked to job insecurity and a 30% pay gap between men and women. And the third is the question of the independent, they are 2.2 million, if all independent living is a solution, but those who come and go, or those who work on new platforms, is a world that will change very quickly. "Murillo says."
Does the project adjust to that?
– There are incentives for postponing the retirement age, i.e. They are interesting in mathematics, because after one year of retirement pensions they increase by 9%, just because they contribute a year more. And there is an incentive to be quoted, in this line is that people are working and quoting more time, and are independent in another project, which has transience.
What do you think President Pinera said he was open to a price increase of up to 18%?
– The basic thing is passability, and if you want to achieve 8% it is longer than 4%. This is related to the labor market, if someone does something and touches it in the end, the equation is compensated.
Is 18% reasonable?
– That's the number suggested by Ocda, we should go there. The same happens when we look at women's labor participation, we are 49%, and in Ocde 60%.
And by their low participation rates, they add that they live for another 10 years.
– There we go back to the topic of the old ones. Women aged between 55 and 59 participate in 58% of the workforce. From 60 to 64, or after retirement, this number drops to 44%, and from 65 to 69, it drops to 25%. A 63-year-old woman in relation to a 58-year-old woman, in terms of her working ability, is equally valid. Then it could be asked if they decided to leave, or the market had kicked them out. There is a very dense point, women today go on average to 61.8 years, i.e. There is a delay.
Can I say that, although I can decide, they postpone?
– That's right, and we worked a lot with employers to try to make it visible. Age should not be a topic. Companies apply retirement plans at the time when the retirement age is fulfilled, which is not sufficiently explicit.
Is 8% instead of 4% much more efficient in terms of pensions to attack this problem in the labor market?
– If pensions are better, we will have much more sustainable business. And at the second point, when it comes to figures of 4% set in the law is very interesting.
– In the period of five or seven years, you can end up with an amount greater than that managed by the APV industry.
Would you be interested in administering it?
-Yes, and I'm sure that competition will open if there are competitors. But in any case, you have passability, and if you say 8%, this should be a passing for the first 4%, and the other for the remaining 4%.
How do you view the discussion in the Congress?
– We are optimists, how much Bachelette reform, as well as Pinera, have the same pillars, that is, who were previously the government and now the opposition, and vice versa, should achieve consensus. But I agree with one point, it is not possible to separately agree on the increase in the contribution and the pillar of support. Finally, there is a topic of fiscal spending that is triggered if a solidarity pillar is approved before a 4% contribution increase.
What happens if the reform is not approved?
– Pensioners grow at a rate of 10% a year, if the reform is not approved, in four years we will have 40% more pensioners, with pensions similar to those they now have. But it will be 40% more than the elderly. Today they represent 12% of the population in Chile, but in 2050 they reach 24%, and people who retired in those years are already quoting.
How do you see the biggest competition the project introduces?
– This field is open. First of all, "say hello to the competition," and as the second element of "equality of rules," this is fundamental. There is also a third element: simplicity can help improve pensions.
Can the physiognomy of the industry be changed?
– You have to look at APV. Initially, AFPs had it and it was not a business, but a complementary element. But when the reform began and when it began to compete competitively for the entry of other players, there was a market explosion. That's a good example and I think you have to look at what happened.
Attendance at the Stock Exchange and Enel
How do you see the discussion about the abolition of tax exemption for capital gains tax?
– For example, if we are looking at the Peruvian market today, it is super illiquid, even though they have replaced the exemption. Capital gains tax, if taxed on dividends, then capital gains would be double tax because people pay dividends.
Does it affect the funds and people?
– Absolutely, because there is an important point, which is an incentive to rescue people. There is a lot of talk about investment incentives, but a bit about people.
Does it make sense to have a liquid market due to tax exemption?
– Hacienda is there to turn Chile into a financial center, because the liquid capital market has two impacts: the issue of economic growth, because it is believed that low funding costs come magically, and the other is a matter of high-quality employment.
Another topic that is being taken on the market agenda is the increase in capital proposed by Enel Americas. How do you see him?
– This is a topic led by the investment team of the AFP Capital (which considered capitalization to be lower), but I would say that I agree with the arguments. Finally, the level of indebtedness that would remain to specify a specific operation of the proposed size is too low in comparison with its peers. If you make an increase in capital of smaller size, it's better for you. But it is good that Enel Americas wants to invest in the opportunities that can be given to him.
"I would not rule out that at some point, on the margin, growth will be corrected upwards"
How do you see the economy for this year, in the international noise scenario, while at the local level, close symbolic companies?
– We saw growth in 2018, but employment progressed less than we expected. It is now true that the growth of 4% is the result of investments, and this item has its backlog that will come into force in 2019. We are relatively optimistic, one of the elements for this is that the possible recession in the United States is moving away. , commercial war is clean, and for Chile it's important. I would not rule out that at one point I could increase my margin.
Last year, the world invested people, insurance savings and FF.MM. it grew more or less to 3%, below 8% and 12% in previous years, which had little to do with asset performance. We believe that this can be reversed, because in the end, the growth of people's savings has to do with income per capita and aging, because when they are older, they save more.
In the meantime, formal employment, which affected AFP, had a reasonable growth level last year, and this year could maintain the level of dynamics.
But despite dynamism, we are in a low-cost world, affecting, for example, annuities and returns.
– Interest rates are influenced by structural reasons, such as digital platforms that reduce costs. The answer to this is alternative assets, you need to evaluate them well, they have a different investment philosophy than liquid assets, AFP invests heavily in processes and equipment, as this is the way.
What are your plans for this year?
– More and more strongly position our brands. The group has been here for six years. In the AFP business we have a share of close to 19%, this business this year must be very good, because we had good results in the profitability of funds.
How well should he walk?
– It is important to keep the quota and, above all, work hard in the sense that our clients are well informed, understand the reform, see where we are going, and we go to digital attention. Two thirds in our AFP is digital attention.
But we have a challenge in saving and investment business, we want to grow more than markets, we are investing heavily today, we have 500 business managers. It is a market with potential growth opportunities, and is linked to pensions.
Life insurance with savings: "This is the change of criterion (SII)"
What do you think of the SII decision that life insurance with savings should be taxed?
-SII in its tax revenue supplement for 2019 established certain obligations for insurance companies and life insurance clients with savings, which basically suggests that capital gains from withdrawals should be subject to tax. We do not agree with such an interpretation and we consider it to be a change in the criteria, which is why we resorted to protection. Basically, watch out for customers, because we understand that it benefits today, and there are some ways to change the criteria. Now we are committed to what justice suggests.
How was the market affected?
– Since its beginning, there has been a significant slowdown. The growth of savings reserves was 3% between 12 months and September, and if you look at it earlier, it is growing at rates of 12% and 15%. This is a big slowdown, and customers are asking, and have taken a very cautious attitude that awaits and sees.
Was this tool used?
– Today, there are 400,000 policies, this is a relatively big issue, but I am returning to this about the incentives to rescue people. That's it. That is the incentive that was established in the law, and I would say that it is one of the few that has survived to save people because they are cut out.