Observation (CEACR) - adopted 2002, published 91st ILC session (2003)

In its previous comments, the Committee examined the provisions of Act No. 1732 of 29 November 1996 and its implementing regulations (Supreme Decree No. 24469 of 1997) (hereinafter "the Regulations"). This legislation establishes a system based on individual funding through the insured person’s accumulated capital managed by private bodies (Administradoras de Pensiones- AFP), which replaces the former system of pensions based on a pay-as-you-go system and administered by a public body, the Bolivian Social Security Institute. The Committee also noted the observations made by the Bolivian Central of Workers (COB). In view of the fundamental changes introduced by the new system (Seguro Social Obligatorio de Largo Plazo), and in the absence of a report from the Government, the Committee had urged the Government to provide a detailed report permitting it to determine whether the new pensions system continued to give effect to the Convention.

In its report, the Government provides certain information on the contents of the new system for the management of pension funds and states that it has recently started to manage funds but has not yet granted benefits. It adds that the statistics contained in its report on the level of benefits relate to those paid by the former pensions system. The Committee notes this statement. However, it recalls that the new pensions system entered into force on 1 May 1997 and that it should normally have begun providing benefits in view of the qualifying periods established by Act No. 1732 of 1996 and its Regulations. Indeed, under this legislation, the persons covered by the legislation, or the breadwinner for dependants of the first rank, are entitled to invalidity and survivors’ benefit in the event of the contingency where they have, firstly, made 16 monthly contributions to the new pension system or the former pay-as-you-go system and, secondly, paid at least 18 monthly contributions over the past 36 months for common risks coverage (see sections 8, 9, 14 and 15 of the Act and section 2 of the Regulations). Special provisions also exist for persons who do not fulfil the above contribution requirement.

With regard more particularly to old-age benefit, the Committee also notes, from the information provided by the Government, that employees applying for benefits after 31 December 2001 are covered by the new pensions system. The Committee recalls that the Government ratified the Convention in 1977 and that as a consequence it is bound to give effect to its provisions in respect of all persons within its scope, irrespective of the nature of the various systems by which they may be covered during their occupational career. It therefore hopes that the next report will contain detailed information on the implementation in practice of the new pensions system and its relationship with the former system, and particularly on the following points.

1. Scope. In reply to the Committee’s comments concerning the scope of the new pensions system, the Government indicates that the relevant statistics are not yet available. In this respect, the Committee however notes that the Internet site of the Superintendence of Pensions, Shares and Insurance (SPVA) provides certain statistics relating to the number of persons registered with the new pensions system. The Committee therefore hopes that the Government’s next report will not fail to include all the statistical information requested by the report form under Articles 9, 16 and 22 of the Convention. In so far as the Government availed itself at the time of the ratification of the Convention of the temporary derogations set out in paragraph 2 of Articles 9, 16 and 22 of the Convention, the Government may wish to refer to questions 3D or E in the report form under these provisions of the Convention, which relate to the number of employees protected and not the number of beneficiaries of a pension.

2. Level of benefits. (a) Invalidity and survivors’ benefits (Articles 10 and 23 in relation to Article 26 of the Convention). In its report, the Government indicates that, to calculate the amount of the benefit, the national legislation does not take into account the requirements of Articles 26 or 27 of the Convention. In this respect, the Committee recalls that while States remain free to adopt their own rules and methods of calculation to determine the amount of benefits, this amount must however be determined in such a manner that it is at least equal to the amount prescribed by Articles 26, 27 or 28 of the Convention, in conjunction with the Schedule appended to Part V (Standards to be complied with by periodical payments). The methods of calculation envisaged by these provisions and the parameters that they use are established solely to permit comparison between national situations and the requirements of the Convention. In view of the fact that, in accordance with sections 8 and 9 of Act No. 1732 and section 41(c) of the Regulations, invalidity and survivors’ benefits are calculated in relation to the basic wage of the insured person, Article 26 is applicable to assess whether the level of invalidity and survivors’ benefit prescribed by the Convention has been attained. In view of the fact that, as authorized by paragraph 3 of Article 26, a ceiling has been set for the basic wage used for the calculation of the above benefits (60 times the national minimum wage in force in accordance with section 5 of the Act), the Committee trusts that the Government will not fail to provide all the statistical information requested in the report form under Article 26 of the Convention (Titles I, II and IV), and particularly the wage of a skilled manual male employee (selected according to paragraph 4 or 5 of Article 26) and the amount of the benefit provided to a standard beneficiary whose previous wages, or those of the family breadwinner, were equal to the wage of the skilled manual male employee.

Furthermore, the Committee notes, from the information provided by the Government, that family allowances were paid neither during employment nor during the contingency. The Government has not therefore to provide the information requested in this respect by the report form.

(b) Old-age benefit (Article 17 in relation to Articles 26 or 27 of the Convention). (i) The Committee recalls that, in accordance with section 7 of Act No. 1732 of 1996 on pensions, the amount of the old-age pension depends on the capital accumulated in the worker’s individual account. In addition, pursuant to section 17 of the Act and sections 18 and 19 of the Regulations, the pension may take two different forms according to the type of contract selected. Where the insured person chooses a life annuity contract, the amount of the pension will be determined and will correspond to at least 70 per cent of the minimum wage in force; where the insured person chooses a variable monthly annuity contract, the amount of the first pension payment will also correspond to at least 70 per cent of the minimum wage in force; subsequently, the amount of the pension will vary as a function of the mortality of the group of pensioners who have selected this pension system, as well as the return on the variable monthly annuity account. In order to be able to ascertain whether the amount of the old-age pension paid by virtue of the new Act on pensions attains at least to the minimum prescribed by the Convention (45 per cent of the reference wage when the insured person has completed 30 years of contribution or employment), the Committee would be grateful if the Government would provide all the statistical information requested in the report form under Article 26 of the Convention, Titles I and III, for each of the types of pension selected. In view of the fact that the new pensions scheme has not yet reached maturity, the Government may perhaps wish to take into consideration the rights acquired or in the course of acquisition under the former system.

(ii) In so far as a minimum old-age pension equal to 70 per cent of the minimum wage is guaranteed for all pensioners aged 65 years, irrespective of the type of pension selected, the Government may also wish to refer to Article 27 of the Convention and to provide the information requested in the report form under Titles I and III. Please also confirm that insured persons, who select a variable monthly annuity contract at the age of 65 years, benefit from a pension that is at least equal to 70 per cent of the minimum wage in force throughout the duration of its provision, and not only for the first pension payment.

3. Reduced old-age benefits (Article 18 in relation to Article 19 of the Convention). In reply to the Committee’s previous comments, the Government provides certain information on the possibility for persons covered by the former system to receive their benefits before the statutory pensionable age in return for a lower level of benefit. The Committee recalls in this respect that its comments concerned the new pensions system. Indeed, pursuant to section 13 of the Regulations, where the old-age pension resulting from the accumulated capital is lower than 70 per cent of the minimum wage in force, the insured person may withdraw from the account, from the age of 65 onwards, monthly amounts equivalent to 70 per cent of the said minimum wage until the capital accumulated in the account is exhausted. The Committee recalls that, in accordance with Article 18, paragraph 2(a), of the Convention, a reduced old-age benefit must be secured at least to a person protected who has completed, prior to the contingency, a qualifying period of 15 years of contribution or employment and that this reduced benefit must be granted throughout the contingency, in accordance with Article 19 of the Convention. The Committee therefore hopes that the Government will be able to indicate in its next report the measures which have been taken or are envisaged to ensure that effect is given to the Convention on this point in relation to the persons covered by the new pensions system introduced by Act No. 1732 of 1996.

4. Duration of benefits (Articles 12, 19 and 25). The Committee notes the information provided by the Government in reply to its previous comments. It requests the Government to confirm that the old-age, invalidity and survivors’ benefits paid under the new pension system are granted throughout the contingency, even where the capital accumulated in the worker’s individual account is exhausted. It also refers to point 3(b)(ii) above with regard to variable monthly annuity contracts.

5. Age of eligibility for an old-age pension (Article 15). In its report, the Government states that no draft amendments to the new Act on pensions are planned with regard to the age of eligibility for a pension, which is set at 65 years. The Committee notes this information. It recalls that under the previous legislation the pensionable age was fixed at 50 years for women and 55 years for men. It requests the Government to indicate, with the support of statistics, the demographic, economic and social criteria justifying the determination of the age of eligibility to a pension at 65 years since, in view of the observations made previously by the Bolivian Central of Workers (COB), the average life expectancy is well below this age (61.86 years for men and 67.1 for women according to the World Factbook 2002; moreover, according to the same source, persons aged 65 years and over only represent 4.5 per cent of the population).

Furthermore, the Committee once again draws the Government’s attention to the fact that, in accordance with Article 15, paragraph 3, of the Convention, the age for entitlement to a pension shall be less than 65 years in respect of persons who have been engaged in occupations that are deemed to be arduous or unhealthy. It trusts that the Government will be able to indicate in its next report the measures which have been taken or are envisaged to give full effect to this provision of the Convention.

6. Revision of benefits (Article 29). In reply to the Committee’s comments, the Government states that the only procedure for adjustment to which recourse is made consists of the adjustment of the national minimum wage and that the latter does not take into account the devaluation of the national currency in relation to the United States dollar, but is based on the price indices of a household basket, which are much lower. It adds that pensions have not been increased taking into account these parameters. The Committee is bound to recall that, in accordance with Article 29 of the Convention, the rates of invalidity, old-age and survivors’ pensions shall be reviewed periodically following substantial changes in the general level of earnings or substantial changes in the cost of living. The Committee hopes that the Government will be able to re-examine the matter and that it will indicate in its next report the measures taken to give full effect to this provision of the Convention with regard to the pensions paid under both the former system and the new system. In this respect, it recalls that sections 2, 4 and 320 of the Regulations provide for a procedure for the adjustment of current pensions and pensions in the course of acquisition based on the devaluation of the national currency in relation to the United States dollar. Please also provide all the statistical data requested by the report form under this Article of the Convention with regard to current pensions. Please also provide copies of the scale determined with a view to the annual increase in the periodical payments acquired or in the course of acquisition under the former pensions system, as determined by the executive authority in accordance with section 57 of Act No. 1732, as amended by Act No. 2197 of 9 May 2001.

7. Maintenance of rights in course of acquisition (Article 30). In reply to the Committee’s comments concerning the maintenance of rights in course of acquisition of persons insured under the former pay-as-you-go system, the Government provides the following information. All insured persons who apply for their entitlement up to 31 December 2001 and fulfil the age conditions and the qualifying period set out in the former legislation can claim the benefits envisaged by the former pensions system. Under section 27 of the Benefit Manual, insured persons who have reached the age of 55 years for men and 50 years for women, and who have paid fewer than 180 but more than 24 monthly contributions, are also entitled to such benefits as a lump sum payment (pago global), although six of the contributions must have been paid during the 12 months prior to attaining the age of eligibility for the pension. Furthermore, under section 1 of administrative resolution No. 012/97, insured persons who have not attained the age of eligibility for the pension set out by the former legislation, but who have paid at least 180 monthly contributions, can receive the benefits envisaged by the former system with a reduction of 8 per cent in their periodical payments for each missing year, provided that they have reached the age of 50 for men and 45 for women.

The Government also refers to section 322 of the Regulations, under which persons who have not been able to take their retirement under the pay-as-you-go pensions system and who had paid at least 60 monthly contributions before 1 May 1997 are entitled to compensation for their contributions in the form of an annuity paid by an AFP. Insured persons who had paid fewer than 60 contributions as of 1 May 1997 are entitled to a lump sum payment provided to them directly by the General Directorate of Pensions.

The Committee notes this information. It recalls that the persons covered by the Convention must receive benefits in accordance with its provisions, irrespective of the fact that they may have been covered during their occupational careers by various pensions schemes, and irrespective of the concepts and principles upon which the latter are based. It therefore hopes that the Government will be able to re-examine the matter and indicate the measures, which have been taken or are envisaged, to ensure that better effect is given to the provisions respecting the maintenance of rights in course of acquisition, particularly with regard to the considerable number of persons who, according to the information provided by the Government, have not accepted the actuarial reduction of 8 per cent in their periodical payments. Noting that this matter is currently the subject of negotiation, the Committee requests the Government to provide detailed information on the measures, which have been adopted or are envisaged in this respect.

The Committee also requests the Government to indicate whether the various compensation measures for the contributions paid take into account not only the contributions paid by insured persons, but also those paid by employers and by the State.

Furthermore, the Committee recalls that, in accordance with the information provided by the Government, section 27 of the Benefit Manual provides for a lump sum payment (pago global) for persons insured under the former pensions system who have attained the age of eligibility for a pension and who have paid fewer than 180 contributions but more than 24. However, it notes that section 322(a) of the Regulations provides for monthly compensation for contributions in the case of insured persons who have paid at least 60 contributions under the former system. It would be grateful if the Government would provide detailed information on the application in practice of section 27 of the Manual with regard to insured persons who have paid at least 60 contributions.

The Committee would, in addition, be grateful if the Government would provide copies of administrative resolutions Nos. 012/1997 and 001/1998, and of the Benefit Manual referred to by the Government in its report.

8. General responsibility for the provision of benefits and the proper administration of the system (Article 35). The Government indicates that it takes responsibility for the provision of benefits through the Pensions Superintendence and the General Directorate of Pensions, which administers the old distribution-based pensions system. The Committee hopes that the Government’s next report will contain detailed information on the measures taken in this respect by the above institutions. It also requests the Government to indicate whether the necessary actuarial studies and calculations concerning the financial equilibrium of the new pensions system are made periodically and to provide the results of these studies and calculations.

9. Participation in the administration of schemes (Article 36). The Committee notes the Government’s statement that the persons responsible for the management of the new pensions system do not accept interference by the persons protected. In view of the fact that Article 36 of the Convention provides that representatives of the persons protected shall participate in the management of the schemes, the Committee trusts that the Government will re-examine the matter and that it will indicate in its next report the measures which have been taken or are envisaged to give effect to this essential provision of the Convention.

*  *  *

The Committee would be grateful if the Government would provide copies of the various types of contracts concluded between insured persons and the AFPs or insurance companies, whether they are life annuity contracts or variable monthly annuity contracts. Please also indicate the manner in which the mortality tables of the groups of pensioners who have selected variable monthly annuity contracts are established, with an indication of whether the rates differ for men and women.

The Committee also requests the Government to indicate whether the Manual providing for standards of evaluation and qualification of the degree of invalidity mentioned in section 24 of the Regulations has been adopted and, if so, to provide a copy of it.

Finally, the Committee hopes that the Government will indicate, for each of the contingencies contemplated in the Convention, the number, nature and amount of the pensions granted under the new system of administration of pension funds.

[The Government is asked to reply in detail to the present comments in 2003.]