Social Security (Minimum Standards) Convention, 1952 (No. 102) - Peru (RATIFICATION: 1961)

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A Government representative (Vice-Minister of Labour) referred to the points made by the Committee of Experts in its observations of 2004 and in addition presented a detailed and extensive written report indicating progress made. He was pleased that the Conference Committee had focused on questions of social security and had not confined itself to Conventions on freedom of association.

I. Health-care scheme

The speaker pointed out that in cases of home visits those affiliated to Health Care Providers (EPS) were entitled from September 2005 to the additional "Doctor at Home" service in the framework of the Contractual Plan with EPS in all contractual plans signed up to by insurance-takers.

As to the changes brought about in the departments of Amazonas, Apurimac, Madre de Dios, Huancalevica, Huánuco, Moquegua and Pasco on applications for membership of the EPS system, the speaker said that 84 per cent of the total number of regular and potential members had been covered in enterprises related to the EPS system at a rate of 4.69 enrolments on average in 2004, including in the abovementioned departments.

In the sample available on "Health care services in enterprises related to EPS plans for departments by type of establishment", in December 2004, one clinic was registered in December 2004 in the Huánuco department, compared with what had been reported in May 2004.

According to available data, health care establishments were operating in the departments of Madre de Dios, Huancavelica and Moquegua. Patients were accepted when their clinical condition warranted it.

The documents sought by the Committee of Experts had been ordered by the Health Care Providers Supervisory Authority and would be appended to the note to be presented on the application of Convention No. 102 in September 2005.

The speaker stated that the participation of affiliated members in the administration of individual institutions could affect the constitutional rights to freedom of operation and ownership of the private establishments taking over from the EPS. Convention No. 102 was based on the assumption that service provision to the public was provided by the State. Consequently, it was logical that contributors played a part in administration. However, in private sector participatory schemes in the services of the public service, the role of the State had changed from one of service provider to one of regulation and administration. Convention No. 102 could be interpreted in the sense that member participation could be carried out by publicly regulated bodies.

II. Pension system

Private pensions system

The speaker referred to the need to have pensions representing at least 40 per cent of the reference salary, recalling that the private pensions system (SPP) was an individual capitalization scheme in that the pension paid out was in direct relation to the amount paid in by the worker during his/her working life, the yield generated by investments and the no-claims bonus if applicable. In this respect, the pensions administered by SPP could not be set in advance.

The speaker provided an estimate based on certain acceptable assumptions: a contribution tax of 8 per cent, a pension of 460 soles, an annual profits tax of 5 per cent at age 65, and 14 annual payments. From the above, it could be deduced that a member contributing for 30 years, i.e. starting as from 35 years old, at a pension level of 460 soles(approximately US$141) would, at the age of 65, receive a payment of 52.4 per cent for men and 50.8 per cent for women. On the other hand, if the worker contributed for 40 years, the payment would be 95.3 per cent for a man and 92.3 per cent for a woman.

The approved minimum pension scheme was a complementary scheme and did not replace state action. The minimum pension represented a guarantee offered by the State to those workers who, in compliance with age and contribution requirements, could not attain a pension that was equal to or greater than the minimum pension established by the SNP.

However, according to the provisions of the Supreme Decree No. 100-2002-EF, those workers who had collected a retirement pension under the modalities of the retirement plan and whose account had expired, had no subsequent claim to the minimum pension. The Supervisory Authority had requested the Ministry of Economy and Finance to evaluate the possibility of financing extraordinary pensions for those workers affiliated to the SPP who could not collect the minimum pension because they were collecting a retirement pension at the time Act No. 27617 came into force, and who currently were receiving a pension that was lower than the minimum pension; and for those workers who did not collect a pension due to the fact that the funds of the Cuenta Individual de Capitalización (CIC) had been exhausted.

The retirement plan could be revoked. Contributors could change to whatever other types of pension they chose: Family Trust Annuity (in new soles or dollars), Provisional Annuity with Deferred Trust Annuity (in new soles or dollars), or complementary products or services within the basic modalities. The SPP guaranteed full cover complemented by an environment which, with appropriate information provided, allowed the contributor to opt for other conditions.

The speaker explained that when a worker went below the security threshold for invalidity and survivor's coverage, he/she could receive a pension under a life annuity trust. In the case where the contributor could not be covered by SPP, a pension was paid out from his/her CIC funds and from the no-claims bonus. The insured person could join the retirement programme and later on opt for an annuity trust, which would ensure coverage until death.

The speaker advised that CIC fund management was handled by AFP, which collected a fee for its services. The AFP could collect commissions as a function of the type of pension fund. In the case of voluntary contributions, the amount of commission collected by the AFP for withdrawal of the abovementioned contributions, could be replaced by an amount sufficient to cover the balance of the Voluntary Fund or the balance of the Voluntary Fund of Legal Persons. They established modifications to the current account with respect to permanent benefits in an administration whose results could be achieved by those members of SPP. AFP could supply programmes that reduced the fees for the service benefits so that it adequately compensated the fidelity and future membership of an affiliated member in the pension fund.

The private system also featured a minimum pension so that the State could subsidize the pension adequately for affiliated members that fulfilled the requirements of age and contributions. The minimum pension was financed directly from funds in the Public Treasury.

In relation to the calculation of the total security costs charged to protected wage earners, the speaker insisted that contributors in the private system were obligated to contribute individual costs at a rate of 8 per cent of monthly remuneration. These contributions were allowed to accumulate to finance retirement benefits since the private pension system was a direct function of the early individual contributions made by workers during their working life.

III. The pension system administered by the ONP

The speaker also stated that part of the pension amount was reduced for those who had 15 years of membership, as stipulated in Decree No. 19990, for those affiliated since December 1992 and 60 years of age and who had completed the required number of contributions. Nevertheless, with regard to the application of Convention No. 102, the ONP had provided answers regarding the qualification costs in terms of the impact of the plan for the National Pension System in terms of the actuarial costs.

In conclusion, the speaker stated that the ILO should deal with the real challenge and contribute to the modernization of the social security system.

The Employer members expressed the view that the case under examination was one of real progress. The Committee of Experts had been looking at this question for many years and the Conference Committee had discussed it on two occasions in 1997 and 2002. More questions were raised at that time, however, than answers given by the Government. The Employer members noted that much more information was at the disposal of the Committee this time. With regard to the issue of medical care, they noted that there seemed to be no violations of the Convention. The Government had provided information with regard to the duty to ensure house visits both in its reply to the Committee of Experts and orally before the Conference Committee. With regard to the issue of individual insurance providers, in particular the duty to ensure the participation in the management of protected persons (Article 72 of the Convention), the Employer members considered that, although the legislation did not provide for such participation, there were supervision and control mechanisms such as, for instance, the need to obtain the approval of the Ministry of Health and to submit health plans to the public authorities in order to be able to carry out their activities. Also, the Committee of Experts pointed out that such mechanism procedures did provide some guarantee for the rights of insured persons. Because of this, the Employer members considered that the provisions of the Convention might be excessively restrictive in this respect.

With regard to the issue of private pension systems, an issue which concerned many other Latin American countries, the Employer members noted with satisfaction that the Committee of Experts accepted that both public and private systems fell within the terms of the Convention. This allowed minimum standards of social security to be guaranteed in different ways.

With regard to other issues raised in the Committee of Experts' observation, the Employer members noted that the Government had reported on various areas of progress. Concerning the minimum rate of 40 per cent of the reference wage applying to the old-age benefit, the Employer members took note of the Government representative's statement which contained figures actually higher than 40 per cent. The Committee of Experts had moreover noted progress in the public pensions level which had risen by 86 per cent between December 1997 and September 2004. The Employer members stated that they disagreed with the Committee of Experts on the issue of the distribution of the costs of fund administration. The observation of the Committee of Experts seemed to imply that the costs should be obligatorily shared between the employers and workers. However, the Convention did not indicate that there was an obligation of equal contributions except in serious situations. In Peru, the employers made voluntary contributions. The Convention only required to prevent serious situations. Moreover, the reported drop in the costs of fund administration in 2002 was a further sign of progress.

Another area of progress was the duty to include a representative of the protected pensions in the management of the public pensions system. Act No. 27617 provided that two representatives of pensioners would be appointed to the Board of the Consolidated Reserve Fund. However, the system was quite complicated and the Employer members agreed with the Committee of Experts that further information was needed in order to establish its conformity with the Convention. The Employer members trusted that the Government would provide this information as it had done in the past.

The Worker members indicated that since the introduction of the new health and pensions system in 1997, the Government had not adopted the necessary measures to apply the Convention. Neither had it presented on this occasion the information necessary to evaluate the conformity of the legislation with the Convention. With regard to the private health system, the observations of the Committee of Experts spoke for themselves and were conclusive with respect to the lack of information by the Government on the measures adopted or foreseen to guarantee the participation of the protected persons in the administration of the health providers.

With regard to the private pensions system, the Government had provided neither statistical information to allow an evaluation of the amount of the benefits, nor information on the measures taken to guarantee that the worker who had opted for programmed retirement would receive the pay and old age and invalidity benefits for the whole duration of the contingency, once the capital accumulated in his individual account had been used up; nor information on the costs, administrative expenses and amount of commissions in favour of private pension fund administrators (AFP).

All this information was necessary in order to evaluate whether Article 71, paragraph 1, of the Convention was applied. By virtue of this Article, "the cost of the benefits provided in compliance with this Convention and the cost of the administration of such benefits shall be borne collectively by way of insurance contributions or taxation or both in a manner which avoids hardship to persons of small means and takes into account the economic situation of the Member and of the classes of persons protected".

The Government had also not communicated actuarial studies and calculations with regard to the financial equilibrium of the public and private institutions required by Article 71, paragraph 3, and Article 72, paragraph 2, of the Convention nor provided information on the measures foreseen to guarantee the participation of the protected workers in the private pensions system administration.

Even more worrying was the fact that the majority of Peruvians were excluded from the health and pensions coverage. Although the Committee of Experts referred to some of Peru's poorest departments, the speaker stated that the problem was national. According to ILO data, in 2000, approximately 60 per cent of the economically active population worked in the informal economy and 7 per cent was unemployed. These percentages had not changed in reality.

The Conference Committee and the Worker members in particular, had firmly supported that the States should protect the weaker segments of the population. It was impossible for a worker to contribute to a private system due to his modest income. Only society could protect workers through systems of intergenerational solidarity. Without the necessary social protection it was impossible to contribute to the creation of the conditions for attaining decent work. Whatever the nature of the system, public or private, the principles of the Convention should be observed with regard to the participation of the protected persons in the administration, financing and functioning of the systems. The State should for its part take on the responsibility of the social security systems so that the benefits would be duly paid.

The Worker members concluded by reiterating that the Government had not provided the requested information to the Committee of Experts and that the system of social security benefits was not in compliance with the requirements of the Convention.

The Worker member of Peru stated that the private pensions system in Peru did not guarantee an adequate pension since the workers' income was low. Increases discussed by the Congress in the draft law on the operational application of the system which in fact were obligatory, had affected the free choice of workers.

The participation of the workers in the supervision of the health insurance providers and the private pension fund administrators (AFP) were very important since these entities were being financed with the funds of the insured. Unfortunately, in reality workers did not have the right to participate in the AFP since the member representing the workers to the Board of Directors had not been elected by them.

The Employer member of Chile stated that the capitalization systems were a response to the important demographic changes which had taken place in the world. In fact, the life expectancies had increased at the same time as the rate of birth had decreased. The ratio between active and passive workers had dropped considerably. In some cases, a single active worker had to cover a passive worker rendering impossible the financing of the intergenerational system and leading progressively to the adoption of a system of defined contributions in which the pension depended on the amount of the contributions made and the eventual profit. Pensions should be rendered profitable through a diversification of the investments.

With regard to unemployment and the informal economy and its relation to coverage, the speaker considered that these important issues should be addressed by public policies and were not the responsibility of the welfare system. Therefore, the pension system had to be based on three pillars so that the State could take on the responsibility for covering those who were unemployed or worked in the informal economy or did not contribute to the private pensions system. The coverage systems should be improved, giving better incentives for hedging to private pension fund administrators (AFP) .

The speaker shared the concerns expressed with regard to the need for strict and technical supervision of the AFP.

The Worker member of Paraguay stated that the reform of the health and pension system was adopted without consultation or agreement on the part of workers' organizations, thus giving rise to a system that excluded the majority of workers. The new system did not respond to the real social security needs of workers. The public and private social security systems should be improved by taking into account the particular circumstances of workers in the informal economy and unemployed workers, who should also be covered. Finally, the speaker insisted that the Government should respond to all of the questions raised by the Committee of Experts.

The Worker member of Chile indicated that the fragmenting and inadequate information provided by the Government had not allowed the Committee of Experts to make observations which would be comprehensible to all. As for the Government's statements relative to the dependency of pensions on the accumulated capital in the individual capitalization accounts, the speaker underlined that only workers made contributions, at the rate of 10 per cent of their salary, in order to finance the old-age benefits. Moreover, the costs of fund administration should be deducted from the contribution of the worker, which was contrary to the Convention. As a consequence, the majority of workers did not manage to cover the minimum pension. In fact, approximately 76 per cent of those affiliated to the system did not have sufficient funds to finance the minimum pension and for this reason, the Government should promise to cover 40 per cent of the pension.

The speaker added that the Government violated the Convention with regard to the tripartite social security contribution as only workers made contributions in the private system. The system did not provide for the contribution of the employer or the administrators themselves of the pension funds. It also did not provide for the granting of reduced pensions to workers after 15 years of contribution. Moreover, a serious risk existed that the mishandling by the pension funds administrators would cause considerable losses in the individual capitalization accounts so that workers could not count on the accumulated funds at the end of their lives, when they were most in need of them. The system had already suffered losses during various periods.

The speaker regretted that the Government had not referred to the comments presented by the World Confederation of Labour (WCL) and urged the Government to respect its commitments and modify the legislation in order to bring it into conformity with the provisions of the Convention.

A Government representative insisted that the public system that existed was insolvent and that it was necessary to find an alternative that gave opportunities to the private sector. In fact, any worker could opt between the public system and an individual account in a private system. An important modification to the social security system had been accepted: employers were in charge of health, while workers were in charge of their pensions.

The private pension system did not violate Convention No. 102. The Government had provided information that contained detailed answers on the administrative costs of the private system. It had requested cooperation and would do so in the future.

The AFP had reduced administrative costs and the private system was more competitive. The AFP had given complete information and was subject to close scrutiny by a pension fund administrator. All of the expenditures and investments that affected the AFP were made public.

In response to the statement by the Employer member from Chile, the speaker declared that the protection of workers was part of government policy. The reduction of underemployment and those employed in the informal economy were priority issues to strengthen the social security system. In Congress, debates had taken place regarding methods of exiting the private system and moving to the public system, and therefore it could not be said that the public system no longer existed. The private system of pensions had been the subject of modifications to improve it. Minimum pensions had been established, coverage improved, and enhanced profitability indicators had been found in AFP. The workers retained a real alternative in the private pension system. His Government believed that this system complied with the Convention, with regard to both health benefits and old-age benefits.

The Employer members stated that the information and statistics provided by the Government in this case pointed to positive developments which indicated that private and public social security systems could coexist. The problems that had arisen in practice were undoubtedly due to the fact that the basic reform of the social security system had only begun ten years ago, that the country suffered from a high unemployment rate and a large number of workers were active in the informal economy. Nonetheless, the information in this case did not lead to the conclusion that there was a violation of Convention No. 102. The President of the International Federation of Pension Funds Administrators had provided this Committee with his expert opinion on the benefits of private social security systems and the urgent need for private and public systems to coexist. The ILO should assist the Government in ensuring that private and public systems can co-exist in this development. Furthermore, the Government should supply information on supervision procedures in the private system.

The Worker members considered that public schemes constituted a pillar of the pension and health-care systems. As indicated by the Committee of Experts, a certain level prescribed by the Convention must be guaranteed, regardless of the type of system selected. The Worker members therefore requested the following: that the Government should give particular attention to all the aspects mentioned and communicate detailed information on the measures taken in response to the Experts' questions and concerns, given the lack of protection of the majority of the population; that the ILO should provide technical assistance in order to guarantee the compliance of the national legislation and practice with the Convention; that the Committee of Experts should formulate a detailed comment taking into account all the elements of the discussion and the information submitted by the Government; and that the Government should supply information allowing the assessment of the scheme introduced more than 15 years ago.

The Committee noted the oral and written information provided by the Government representative and the discussion that followed. The Committee nonetheless observed that, since the introduction in 1997 of the new, mostly private health and pension systems, the Government had not yet adopted all measures necessary to give effect to various provisions of the Convention, nor had it provided the necessary information to evaluate these systems with the Convention. With regard to the private health-carte scheme, the Committee hoped that, the Government would provide the information requested by the Committee of Experts on the measures adopted or foreseen to guarantee the participation of protected persons in the administration of the Health Care Providers (EPS) scheme.

With regard to the private pensions system, the Committee also hoped that the Government would provide information, including statistics, which would permit the evaluation of the amount of benefits, as well as the measures adopted or foreseen to guarantee a worker who had opted for programmed retirement the payment of old-age and invalidity benefits throughout the duration of the contingency. The Committee also hoped that the Government would provide information on the costs, administration charges and the rate of commissions charged to workers affiliated with private pension fund administrators (AFP).

Finally, with regard to the private and public pensions systems, the Committee hoped that the Government would communicate actuarial calculations and studies on the equal financing of public and private institutions, and indicate the measures it envisages to take to guarantee the participation of protected persons in the administration of the private pensions system. The Committee therefore urged the Government to take the necessary measures to give effect to the provisions of the Convention and to provide in its next report all information requested by the Committee of Experts, so that it may be examined with the information provided by the Government in this Committee. The Committee suggested that the Government have recourse to technical assistance from the ILO to resolve pending problems of application of the Convention.

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A Government representative noted that in its observations regarding the health-care system, the Committee of Experts criticized the application of Act No. 26790 on the modernization of social security in the health area and its corresponding regulation, Supreme Decree No. 009-97-SA, which separated health insurance benefits into two categories, simple cover and complex cover. The content of these two covers included all benefits regulated under Articles 8 and 10 of Convention No. 102.

Simple and complex covers were regulated by paragraphs (f) and (g) of section 2 of Supreme Decree No. 009-97-SA (regulation of Act No. 26790 on the modernization of social security in the health area). The system of health care providing entities (EPS) - a system complementary to the ESSALUD (social security system in the health area) - to which workers could freely affiliate, had to ensure benefits under simple cover which were obligatory in contracts concluded between employers and the EPS. Furthermore, the contracting parties could come to an agreement on supplementary benefits.

Home visits by practitioners of general medicine were not specifically regulated but there existed a programme of home care (PADOMI) which provided general and specialized health care, as well as continuous care, through home visits. This programme was regulated by an internal policy of this institution.

Regarding the submission of samples of insurance policies contracted with the EPS and specimens of membership forms, they would be annexed to the detailed report that the Government would present before 1 September 2002.

The EPS had a national geographical coverage since there was no statutory limitation or restriction on any region. Health services provided in the context of the EPS were distributed in the majority of departments of the country. The departments in which there did not exist any health-care service linked to the EPS system were Madre de Dios, Huancavelica and Amazonas. The total number of persons affiliated to the EPS system was 339,372, while the number of persons insured with ESSALUD reached 7 million of which 2 million were titulars and some 5 million beneficiaries. The report regarding the EPS would be annexed to the report that the Government would supply on Convention No. 102.

The copy of the superintendent's resolution No. 053-2000-SEPS/CD as well as the mentioned regulations requested by the Committee of Experts, would be sent. The Committee had also requested detailed information on the manner in which the superintendance of health-care providers (SEPS) exercised its supervision on the system, as well as a copy of the inspection report. In this regard, section 14 of Act No. 26790 provided for prerogatives conferred to the SEPS to supervise the functioning of the EPS. Section 18 of Supreme Decree No. 005-98-SA, regulating the organization and functions of the SEPS provided that the role of the intendance of the supervision of entities (ISE) was to plan, conduct and coordinate surveillance and supervision activities of the EPS, of prepaid entities and other special regimes, in accordance with the regulation of the SEPS and other laws in force.

The system of inspection and supervision was regulated by superintendence resolution No. 053-2000-SEPS/CD of August 2000, which approved the general regulation regarding the supervision of the SEPS. This regulation provided supervisory activities which were at the same time preventive, permanent and complete. Resolution No. 026-2000-SEPS/CD, published in May 2000, approved the regulation on infractions and sanctions of the EPS. In this way, legislative texts provided sufficient supervisory activities to conduct preventive supervision as well as repressive and rehabilitating action by the intermediary of a specialized body of the SEPS, responsible for overseeing respect for rights and obligations of participants in the system. The Committee of Experts had asked that, at the moment of implementation of the new social security system in the health area, the necessary studies were conducted to guarantee the financial viability of the component bodies. In accordance with article 71 of Supreme Decree No. 009-97-SA, to benefit from the authorization of establishment, the promoters of the EPS had to present to the SEPS a study on economic and financial feasibility. Regarding the participation of protected persons in the administration of the system, in particular the EPS, and of the representatives of these persons in the directing bodies of the SEPS, under article 14 of Act No. 26790, the SEPS was a decentralized public organ of the heath sector whose functions were to authorize, regulate and supervise the functioning of the EPS and to oversee the proper use of funds administered by the latter.

The national pension system was based on a distribution regime implemented in a period where the ratio of contributor to beneficiaries was much higher than in the present. A series of exogenous factors had provoked the bankruptcy of the system. Faced with this situation, a private pension system was put in place (Supreme Decree No. 054-97-EF). The legislation granted workers the right to choose between these two systems. If they did not exercise this right within a fixed period it was considered that they opted for affiliation to the private system. In this regard, Law No. 27617 of 1 January 2002 established inter alia the minimum pension under this system, for which regulations were being elaborated. The private pension system was administered by the Administradoras de Fondos de Pensiones (AFP) which managed individual accounts of capitalization of insurance, accounts that financed old age, invalidity and survivors' pensions. This showed that the State did not intend to abolish its obligation to ensure a national social security system. This restructuring aimed to grant pensioners an advantage through the intermediary of the national public savings fund. For example, in the case of permanent invalidity, the programmed pension was given as a survivor's pension; the titular retained ownership of his or her individual account of capitalization, which generated benefits for the beneficiaries and was adjusted four times a year in relation to the economic situation. The administrative fees related to affiliation or transfer were charged to the worker since in a private system of capitalization, taxes were not part of AFP revenues. There was henceforth an absolute separation between the inputs of each worker, since the administrative fees were covered by a minimum percentage of the contributions of each worker - a contribution which integrated the funds financing administrative fees through a mini-system of distribution. Concerning the conditions for obtaining pension rights, 20 years of contributions had to be accounted for to benefit from a complete pension proportional to the amount capitalized.

The Government was aware of the importance of social security Conventions given the essential role that social security played in the fight against poverty. Thus, it was necessary to do all that was possible, with the support of the ILO, to find adequate solutions to harmonize standards and international obligations with the policies of national legislation. It was also necessary to see that a higher level of pensions was progressively obtained, which constituted the objective of the private system of pensions.

Finally, the report that the Government would supply would include all statistical information requested by the report form under articles 65 and 66 as well as information on the concrete measures adopted in view to guarantee the application of article 71, paragraph 3, and article 72, paragraph 2, regarding the supervision of both private and public pension systems. The inspection report requested by the Committee of Experts and the actuarial study would also be communicated.

The Employer members noted that the Committee of Experts had made comments on the issue of social security in Peru for a number of years and that this Committee had dealt with this case for the first time in 1997. Convention No. 102 was a complex instrument but it was not ideally suited for an oral discussion. In its report, the Committee of Experts had referred to questions related to health-care and pension schemes. As the Government report had not provided detailed information on a number of issues, the Committee of Experts had to raise several questions in order to get a clearer picture of the situation in the country. Since 1997 a fundamental legislative change had taken place in this area and the Committee of Experts had asked whether the benefits to be provided under Article 10 of the Convention continued to be guaranteed under the new legislation. This was a crucial question. The Government representative had provided certain answers that the Employer members would prefer to leave to the Committee of Experts to evaluate. On the regional distribution of medical care provided either by the public services or contractual health providers, the information provided by the Government representative today should be provided in writing to the Committee of Experts so that it could be examined. The supervision of primary regional health providers raised no problem according to the Government and was characterized by the principles of prevention, permanence, continuity and integrality. The Committee of Experts needed to know however whether the financial stability of these providers was guaranteed. The Government representative had advised this Committee that the proper use of the funds managed by those bodies was ensured by preventive inspection measures and by the imposition of sanctions, if necessary. This information should be submitted to the Committee of Experts for further examination.

With regard to the question of private pension schemes, this was a well-known topic in this Committee and concerned many other countries in Latin America. The Committee of Experts had reiterated questions that it had asked in the past without getting an answer. The Government should answer these questions. Both the Committee of Experts and this Committee agreed that the coexistence within the social security system of private and public pension schemes was not incompatible with the Convention which was highly flexible on this point since it allowed the minimum level of social security to be maintained through various methods. Concerning the pensions to be paid, the Committee of Experts understood that private pension systems, dependent on the accumulation of capital, could never ensure a fixed level of pension benefits. Nevertheless, it should be possible for the Government to provide statistical data showing the average pension payments under the private scheme. What mattered after all was to provide the minimum level of old-age benefit as prescribed by the Convention, irrespective of the type of scheme. Other questions raised by the Committee of Experts related to: the period of contribution necessary to obtain a right to old-age benefits, the duration of benefits especially in the context of a "programmed retirement", the benefits payable in the event of permanent total invalidity of workers who had selected the "programmed retirement" and the level of administrative expenses of the private pension scheme, for which the contributions of workers should not exceed 50 per cent. With regard to the qualifying period, the Committee of Experts enquired about the minimum period of contribution required in relation to old-age benefit, and the Government representative responded that the minimum requirement was 20 years. The Convention established a period of contribution of 15 years. Regarding the public old-age benefit scheme, the Government representative had indicated that the benefits paid under the public scheme were not sufficient, even though additional funds had been provided from a national foundation. The Committee of Experts had recalled the purpose of old-age benefit schemes, which was to ensure a certain standard of living, taking into account the rate of inflation. In conclusion, the Committee of Experts had raised more questions than it had received answers and assessments. The Employer members welcomed the Committee of Experts' approach since the only possible way to analyse precisely such a complex social security scheme was through exact information. Therefore, the Government had to provide the information requested so that the Committee of Experts could analyse it and provide conclusions instead of asking questions.

The Worker members indicated that the application of Convention No. 102 by Peru had already been the subject of discussions within the Committee in 1997, and that the social security issues in this country had been examined several times in the context of the application of older Conventions. The Committee of Experts had regretted that the Government had not furnished sufficient detailed information, which would enable it to assess the extent to which the new schemes put in place allowed to give effect to the Convention in law and in practice.

With regard to the health-care scheme, the Worker members referred to various comments of the Committee of Experts and urged the Government to furnish all the information required to the supervisory bodies so that they could assess the extent to which the State assumed overall responsibility of guaranteeing benefits: the scope of the benefits provided compared with those provided for by the Convention; and the scope of geographical coverage of the new health scheme, particularly the geographical coverage of the heath-care providers (EPS).

As regards the private pensions scheme, if the workers had the option of joining one or the other component of the pensions scheme, the Committee of Experts had stressed that in practice the private pensions scheme, which co-existed at present with the public system, would eventually replace it. Even though the Government refused to recognize the relevance of Convention No. 102 in the context of its private pensions schemes, it was appropriate to recall that the purpose of this Convention was to impose a minimum of social security, whatever was the nature - public, private or mixed - of the social security system chosen. Moreover, this Convention had been designed in a very flexible way. As such, for example, ratifying States could specify which parts of the Convention they accepted. Similarly, the level of protection required could be obtained without the Convention determining a specific system of management or organization. It was regrettable that the Government had shown an ideological bias regarding the Convention.

Concerning the practical application of the Convention in Peru, various problems existed. The rate of the pensions provided by the private pensions system did not appear to be determined in advance since it depended on the capital accumulated in individual capitalizations accounts; hence the need to have statistics to assess fully to what extent the old-age benefits attained the level prescribed by the Conventions, whatever the component chosen. Problems also existed regarding the ensurance of a minimum benefit: the ensurance of benefits throughout the contingency, particularly in the context of the "programmed retirement"; the risk to impose a financial burden which is too high for people with small means taking into account that certain commissions were paid entirely by the workers who were affiliated with AFP; the amount of the insurance contributions borne by the employees that could exceed 50 per cent of the total of the financial resources allocated to their protection, contrary to Article 71, paragraph 2 of the Convention. The problems raised did not only refer to a quarrel about numbers or to technical issues but also related to substantive social issues.

As regarded the public pensions system, the Government's criticism of that system was surprising, and it was regrettable that the Government appeared not to have been interested in finding concrete and efficient solutions to ensure its survival, its efficiency and the effective payment of pensions.

The Government should, moreover, provide information on the measures taken to ensure the application of the Convention as regards the system of supervision of pensions and the responsibility it has in this area, as well as on the measures to ensure the participation of the persons covered in the administration of the systems.

The comments made by the association of retired workers of the oil industry of the metropolitan zones of Lima and Callao, and those made by the National Centre of retired and pensioners of Peru raised serious problems. Indeed, a growing number of people who met the conditions for obtaining benefits did not receive pension benefits and were obliged to resort to the courts to enforce their rights. The general responsibility for guaranteeing the overall good functioning of the system of pensions fell on the Government.

Convention No. 102 was an essential element in safeguarding the rights linked to decent work. Difficulties in the application of this Convention in Peru constituted a warning against naïve and non-serious approaches that were fashionable. These approaches could have serious and painful consequences for those who had individually and collectively contributed, with a view to obtaining decent benefits. Rights acquired by work should not be sacrificed for ideological reasons or for reasons of economic profit. The political upheavals witnessed by Peru, and particularly the presence of private pension funds, said a lot about the use of acquired rights of workers for private purposes. The Government should endeavour to respond to the observations of the Committee of Experts and to provide all the information required to allow a correct evaluation of the application of this Convention. In this regard, they recalled the conclusions of the General Survey on Social Security Protection In Old-Age of 1989 according to which "The extent of the economic problems facing national pension schemes must not make one lose sight of the extreme economic vulnerability of older persons, for whom their pension is often their only means of subsistence. To guarantee today's pensioners a fair share of what they gave during their working life is a fundamental concern of social justice".

The Worker member of Peru stated that the Peruvian workers followed with a lot of concern the evolution of the situation of social security in his country. The "dictatorship" of Alberto Fujimori imposed legislation contrary to the workers and in violation of the most essential workers' rights having recourse to that effect to acts of corruption and including recourse to assassinations in order to carry out his destructive policy. Some of these laws concerned social security and the pension system.

Concerning the health-care scheme, the concept of social security had been distorted with the obvious intention to privatize the workers' health-care system by the creation of health-care providers (EPS), originally called enterprises, that workers would join not by individual right but by so-called elections in which workers would participate whether they were members of a trade union or not. These enterprises were under the only obligation to afford minimum service, by obtaining 25 per cent of the contribution destined to social security and impoverishing that system as the more complicated cases were covered by that public system through ESSALUD. With these measures the principle of solidarity had practically disappeared. The coverage of these private EPS was not national for the simple reason that these entities did not function where there was no profitability, and the contributing workers were represented neither in the EPS nor in their supervisory bodies.

Concerning the pensions scheme, the situation was worse because the contribution fell totally upon the worker and the private system had not been created and imposed as an complementary opportunity but in order to eliminate the public system. All workers who had joined this system since the adoption of the law were obliged to be affiliated to a pension fund administrator (AFP) and could not return to the national (public) pension scheme. These pension fund administrators charged the worker 2.8 per cent of his or her wage in order to administer his/her funds, whether or not the worker was paid, and the workers were not represented in the AFP or their supervisory bodies. The principle of solidarity had been eliminated in this case as well, since the AFP operated as a savings bank from which each one would receive his/her pension in accordance with the amount contributed, and there was no guaranteed minimum pension. A minimum period of contribution was 20 years at the age of 65, which did not correspond to the minimum of 15 years established by the ILO.

In this regard it should be noted that the State, due to the inadequate economic and financial policies of the various succeeding governments, owed several billions of dollars to the national pension system, as was confirmed by the decision of the Inter-American Court of Human Rights, a debt that remained unpaid and had no perspective to be cleared.

The labour laws inherited from the Fujimori period were still applicable in Peru. They violated the international Conventions and the recognized fundamental rights, which were accepted and ratified by various Peruvian governments. There was as yet little progress in this regard. The speaker shared the concern expressed in the Committee of Experts report in regard to the Government's practice in the field of social security, referring to comlaints of workers' and retired workers' organizations of the country. He urged the Government to consider these problems on a priority basis and to resolve them. He also requested the ILO and its competent bodies to follow developments closely.

The Worker member of Brazil stated that certain aspects of this case were worrying. The putting into operation in 1992 of the process of privatization of the social security system entailed consequences for the application of Convention No. 102. In fact, the Committee of Experts' comments raised certain doubts about the effective application of the Convention. The Government did not provide explanations on this point. Regarding the health-care benefits of the private scheme, the Committee of Experts requested additional information in order to evaluate whether services supplied by the health-care providers (EPS) cover in practice the whole population, and particularly persons having low means of subsistence, within the framework of a simple cover system. There was also a question whether medical benefits were provided at the level established by the Convention and whether financial participation required in their provision was not too high. It was worrying to note that the establishments providing health-care benefits under the auspices of the EPS or through their own services were entitled to a credit from workers' contributions equal to 25 per cent of those contributions. Besides, since the EPS covered only salaried workers, they protected only 21 per cent of the active population, which was hardly equal to 11 per cent of the total population. It resulted in a situation whereby the amounts absorbed by the private system did not correspond to the number of persons protected by that system. The Government did not supply samples of insurance policies concluded with an EPS, which made it difficult to know the guaranteed scope of coverage and its precise cost for insured persons. The speaker stressed that only 104,100 workers were protected by the EPS. Thus, only 0.4 per cent of the population could benefit from the protection guaranteed by the Convention. Regarding the participation of representatives of persons protected in the administration of the system, the Government admitted that there was no such participation at the system supervisory bodies, and did not furnish information either on any participation at the level of the EPS and the enterprises' own health-care services.

Regarding the pensions scheme, it turned out the workers could not really choose between the public and private system. In fact, even if such a possibility existed on paper, one should know that such a choice was to be made in writing within a ten days' term. This would be the only period of time during their working life when workers had a choice, since once they had chosen the private pension system, they could not re-join the public one.

The Worker member of France stated that the reforms of the social protection systems had been the object of many discussions within the Committee. The reforms made in Latin America in the 1990s had many points in common, and as such, under the pretext of modernization, contribution systems guaranteeing workers' collective participation were being privatized. The individualization of risk provoked an increase in precariousness and poverty.

It was hoped that the Government would fulfil its obligations and honour its promises. It should, however, have already been able to honour them, by supplying the Committee of Experts with the responses requested and by recognizing that workers were not associated with the management of the system. These failures raised doubts about the content of the report which would be communicated. The Government absolutely had to give honest and complete answers to the requests of the experts and supply the relevant information on the viability of the system. It was essential to ensure the participation of employees in the administration of the bodies which were to guarantee their fundamental rights, in this case, the right to health and the right to old-age pension benefits.

The Government had pursued a deliberate policy of destruction of the public system to the benefit of the private system. Instead of bringing the necessary changes to the old public system, it had preferred to use funds from the privatization of national enterprises and from public indebtment to put in place a new privatized health and pension system. Convention No. 102 allowed for the coexistence of different components in the social security system, public, private or mixed ones, but whichever system was chosen, the Government had to respect the obligations that resulted from the ratification of this Convention. It had to supply all the information requested and envisage the postability of pensions, that is, workers should have the power to transfer at any moment, funds they had placed in the private system of capitalization.

The Employer member of Chile stated that many industrialized countries had opted for a voluntary pension scheme, based on individual capitalization, which would offer more guarantees than the pay-as-you-go system, which entailed risks of bankruptcy. Although in Latin America the level of voluntary savings was extremely low, the speaker asked that the possibility to use the formula of individual investments be provided to the developing countries as, when implemented with skill, this formula would prove very profitable and offer better pensions.

The Government representative thanked the Employer and Worker members and the trade unionists for their statements. He noted that in 1991 his country had abolished a single pension scheme based on a pay-as-you-go system and regulated by Act No. 19-9/1990. He explained that until that date, the direct contributions of the workers had been misappropriated and had been used, among other things, in order to build roads, as a result of which they had never been retrieved. In addition, the previous Government had tripled the number of social security workers, which had passed from 15,000 workers in 1985 to 45,000 in 1990. These contributions were also used in order to buy property and make various investments, which contributed to precipitate the failure of the system.

For this reason, a non-compulsory private pension scheme had been set up, which the workers who had been defrauded by the pay-as-you-go system opted to join. The speaker specified that according to this system, if during the first eight days of work the employee did not opt for a scheme, it would be assumed that he had elected the individual capitalization account and this did not lead in any way to an elimination of the worker's freedom of choice.

The speaker reiterated his commitment to supply to the ILO, before 1 September 2002, all the necessary information so that the Experts in charge could evaluate and examine it, after which they would certainly reach the obvious conclusion that the current Government administered properly the insurance systems. He added that, contrary to the earlier system, the present one guaranteed minimum pensions both with the private scheme and with the pay-as-you-go one.

The Worker members emphasized the role of the State in the field of social security, as reaffirmed by the Committee of Experts in its 1989 General Survey on the social security protection in old age. The Committee of Experts pointed out that the problems facing social security, and national pension schemes in particular, were by no means due to the nature of the institution itself but were mainly caused by external economic factors. In the social field, more than anywhere else, the State's role was vital, since it was to guarantee, despite difficult economic conditions, the institution's ability to meet their pension commitments. Besides, the employers' responsibility in this sector should not be underestimated. In this regard, a question arose about the employers' contribution into the private schemes introduced in Peru. The concept of decent work presupposed the right to decent social security. Measures to guarantee this right contributed to the maintenance of social peace. The Government therefore should be requested to provide, as soon as possible, a reply to the Committee of Experts' requests, supplying the most detailed information.

The Employer members stated that the Convention pertains to a very complex issue, which was indirectly reflected by the relatively limited number of ratifications it had obtained. They disagreed with the statement of the Worker members that the coexistence of both a public and a private scheme was permitted only as long as the private system was subject to the same requirements as the public scheme. This would mean that there would be no difference in the systems except in name. In comparison, however, the private system was much more successful in the long term than the public system and therefore better for the persons insured.

The Employer members stated that the accusations made concerning ideology came from critics of the private system. They considered these kinds of statements to be of no value since the only thing that counted was the benefit conferred to the insured person. They indicated that there were two kinds of pension schemes within the social security system: the traditional public allocation system and the modern individual capitalization system. They were convinced that the latter scheme functioned much better. This country which had implemented the traditional system, was now facing many problems with the public system. It was, therefore, offering an additional private pension system that constituted a stabilizing factor to the traditional public pension system.

In conclusion, the Employer members said that the Government should provide detailed information in reply to the comments of the Committee of Experts, so that this Committee would be able to provide its analysis.

The Committee took note of the declaration of the Government representative and of the discussion that had taken place. The Committee observed that, since the introduction of the new health-care and pension schemes (particularly the private ones) in 1997, the Government had not supplied the detailed information requested by the Committee of Experts, which was necessary for the evaluation of the conformity of these schemes with the Convention. Even if Convention No. 102 was conceived in flexible terms and the minimum social security level could be attained by different means, the Convention nevertheless fixed certain principles of general scope relating to the organization and functioning of social security schemes. In order to enable the Committee of Experts to examine whether effect had been given, in law and in practice, to these principles, as well as to other provisions of the Convention, the Committee persistently requested the Government to communicate for examination by the Committee of Experts at its next session in 2002 a detailed report concerning all the information requested by the Committee of Experts. It noted in this connection the Government's declaration concerning its intention to comply with the obligations arising from the Convention. The Committee also noted the Government's indication that it would supply as early as possible a detailed report, which should be done before 1 September 2002.

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A Government representative stated that this Convention established in Part II that all member States which had ratified it must guarantee preventive and curative medical care. Furthermore, it provided other benefits which must be guaranteed by ratifying member States, including: cash sickness benefit, old-age and survivors' pensions; work injury benefit in case of accident or occupational disease, family benefit and maternity benefit. In this respect, in Peru the National System of Social Security was comprised of the following regimes: the National Pensions System, regulated by Decree No. 19990, the National Health System, regulated by Decree No. 22482; and the System of Work Injuries and Occupational Diseases, regulated by Decree No. 18846. Regarding certain comments of the Committee of Experts, the Government representative provided the following information: Old-age benefits (Part V). Article 29 of the Convention established the conditions for the right to a full or reduced old-age pension. Concerning the Peruvian private pensions system, employed and self-employed workers both were entitled to join and benefits were paid to affiliates who completed 65 years of age, the age prescribed in Article 26(2) of the Convention. It was important to note that in this case, no qualifying period existed for receipt of an old-age pension, exceeding in this respect the qualifying conditions established by the Convention and demonstrating that the private pensions system went beyond the minimum standards. The amount of pensions provided in conformity with section 13 of Act No. 26504 was not effected. The Government of Peru had established by supreme decree the requirements and conditions under which the private pensions system must guarantee a minimum pension to its affiliates. In this respect, attention was drawn to section 13 of Resolution No. 484-95-EF/SAFP which sets the parameters for establishing the amount of the minimum pension due in case of payment in the form of a programmed retirement or temporary annuity.

Furthermore, Article 30 of the Convention established that old-age protection shall continue throughout the contingency, i.e. during the entire time that the insured lives beyond 65 years of age. It was noted that the private pensions system provided various modes of payment of retirement benefit which were freely chosen by the affiliate or the survivors. In effect, section 42 of Decree No. 25897 established the following methods: (1) programmed retirement benefit; (2) personal life annuity; (3) family life annuity; or (4) a temporary annuity with a deferred lifetime annuity. Through these methods, except for the programmed retirement benefit, pensions were provided to workers throughout their retirement, fulfilling the minimum standards contained in Article 30 of the Convention. In addition, in the case of a family lifetime annuity and a temporary annuity with a deferred lifetime annuity, the pension would continue beyond the life of the insured and be converted into a survivor's pension. The method of payment of pension was freely chosen by each worker, demonstrating that the system was based in full on the choice of the worker who knows best his or her interests and needs.

Article 58 of Convention No. 102 established invalidity protections to be paid when an insured person became unable to exercise an occupation. In conformity with section 9 of Act No. 2679 on the modernization of the social security law of Peru, Social Health Fund under the Peruvian Social Security Institute paid cash benefits for temporary invalidity and maternity. Affiliates of the private pensions system were compulsorily covered under this scheme. When the incapacity exceeded the period of cover for the insured person, the affiliates of the private pensions system had the right to a temporary invalidity pension paid out of their individual capital accumulation accounts or to select the applicable method for payment of retirement benefit. In case of permanent invalidity, the insured could choose between an early retirement pension, as provided by law, or the applicable normal retirement pension. As could be seen, the system guaranteed that an insured worker who suffered from an incapacity which rendered him or her unable to work was provided for, even when the disabled worker had not fulfilled the conditions for a regular pension.

Regarding Articles 65 and 66 of the Convention on the calculation of various cash benefits provided under the social security system, it was pointed out that the implementation of the private pensions system had taken into account these criteria. The Government of Peru had paid special attention to the establishment of criteria for fixing the minimum amounts of pensions and subsidies, which was related in each case to the previous remuneration of the insured worker. In this sense, section 13 of Law No. 26504, through a supreme decree, had established the requirements and conditions under which the private pensions system guaranteed a minimum pension to its affiliates. Resolution No. 484-95-EF/SAFP fixed the rules for establishing a minimum amount for a pension under the programmed retirement or temporary annuity methods of payment. Decree No. 19990 which regulated the National Pensions System set the invalidity pension at 50 per cent of the reference wage, i.e. the insured earnings. As could be seen, these levels were in accord with the percentages established in the annex to Part XI of the Convention. Act No. 23908 of 1984 fixed a minimum pension equal to three-times the minimum wage established in the industrial sector in Lima. This did not currently include pensions which had been paid for less than one year from the date the insured became entitled to a pension. It was clear that the framework of standards had been modified, but it was no less certain that the will had existed to establish these minimum levels of benefit to guarantee an adequate benefit.

As could be appreciated, the Peruvian Government had largely exceeded the minimum standards of the Convention, demonstrating its willingness to adequately protect workers and the population in general. Social security had been enshrined in article 10 of the Peruvian Constitution.

Finally, the Government representative explained briefly that the private pension system existed in Peru in parallel with and alternatively to the public system, and that affiliation was voluntary. It was administered by the Pension Fund Administrators (AFP) and regulated by Decree No. 25897. This system functioned through individual savings investment accounts. The Government had issued standards for the private pensions system with the aim of developing and strengthening pensions which had not been adequate. Equally, the implementation of this system implied the recognition of the right of workers to voluntarily select which system to join, without any coercion, as stated in the constitutional provision of the "principle of freedom of contract". In June 1996, this Committee had invited the Government to furnish information on ratified social security Conventions (Conventions Nos. 35 to 40). At that time, it was indicated that the public system of pensions paid a maximum pension which was absolutely insufficient and did not relate to the amount of contributions paid by the worker. The Government therefore developed this system with the goal of improving pensions for Peruvian workers. The implementation of this system in Peru had brought substantial benefits for all of the country through the savings produced which had been invested in various projects and created new jobs. Furthermore, according to various studies carried out in Peru, it appeared that persons affiliated with the private pensions system received significantly greater pensions than those paid under the public system. The benefits provided by the private pensions system included only old-age, invalidity and funeral benefits and did not concern medical benefits which were provided under the National Health System.

In light of the above-mentioned information, the Government considered that the private pensions system developed in the framework of social protection could not be understood or analysed within the context of Convention No. 102. For this reason, the Government called on the ILO to revise the provisions of this Convention, in order to allow for new approaches to social security now being adopted in various countries around the world. The Government considered that the National System of Social Security complied with all of the provisions of the Convention on minimum standards of social security.

The Workers' members thanked the Government representative for the information that he had provided and that he had undertaken to supply to the Committee of Experts for its examination. They recalled that issues relating to Peruvian social security had been discussed by the Committee in 1994 and 1996 with regard to the application of older social security Conventions, namely the Old-Age Insurance (Industry, etc.) Convention, 1933 (No. 35), and the Survivors' Insurance (Agriculture) Convention, 1933 (No. 40). In 1996, it was decided to put aside those outdated Conventions with immediate effect and to promote the ratification of more recent instruments, and particularly the Invalidity, Old-Age and Survivors' Benefits Convention, 1967 (No. 128).

In general terms, the Convention established minimum standards for all branches of social security, which were then set out in a fuller and more detailed fashion by other Conventions such as the Invalidity, Old-Age and Survivors' Benefits Convention, 1967 (No. 128). As observed by the Committee of Experts in its present report and in its General Surveys of 1961 and 1989, the Convention was designed in a very flexible manner. Indeed, Article 2 of the Convention laid down that member States which ratified it could specify the Parts under which they accepted the obligations. Furthermore, under the terms of Article 5, ratifying States, which were bound to protect prescribed categories of the population accounting for at least a specified percentage of workers or residents, had to ensure that the prescribed percentage was achieved. The required level of social security could be attained in various manners, since the Convention did not endeavour to promote one system of management and organization over any other system. It was intended to impose minimum standards, irrespective of the public, semi-public, mixed or private nature of the system in question.

The Workers' members deplored the ideological approach adopted by the Government, which was illustrated by the report it had transmitted to the Committee of Experts. Without replying to the detailed observations of the Committee, it had confined itself to general remarks of a political nature. The statement made by the Government representative to the Conference Committee was of the same nature. Irrespective of the nature of the system in question, governments and public authorities had a general responsibility to ensure the proper administration of the institutions, enterprises and services concerned with the provision of benefits. In this respect, the Workers' members referred to the position that they had expressed on the social security Conventions during the Committee's general discussion. They noted that the Employers' members had expressed substantially the same opinion.

In the same way as the Committee of Experts, they noted that the private pensions system was organized in such a fashion that, once a worker had joined a private pension fund administration, it was no longer possible to be insured under the scheme administered by the Insurance Standardization Office, which meant that the private pensions system which currently coexisted alongside the public system could end up totally replacing the latter. In these circumstances, the private system would become the definitive system for the worker concerned, who would then be subject to the important shortcomings noted by the Committee of Experts. In particular the payment of pensions was not guaranteed for the whole duration of the contingency. Furthermore, nothing guaranteed that the minimum pension, prescribed by the Convention, would be achieved, since pension benefits also depended on the capital accumulated in individual accounts. Workers appeared to have to pay the totality of contributions. Finally, it appeared that protected persons' representatives could not participate in the management, which was contrary to a basic rule of democracy. With regard to the public pensions system, the Workers' members deplored the fact that the Government confined itself to criticizing the scheme without endeavouring to find practical and effective solutions to guarantee its survival and effectiveness and to ensure the payment of pension benefits.

The Workers' members emphasized the serious nature of the problem and noted that an increasing number of people, who were entitled to receive a pension, no longer received it and were obliged to go to the national courts in order to have their rights upheld. The general responsibility for guaranteeing the survival and proper functioning of all the pensions systems concerned lay with the Government. The issue in question was a matter of fundamental principles and proper public administration. They therefore requested the Government to reply to the detailed observations made by the Committee of Experts and to undertake to adopt measures in the near future which would give effect to the provisions of the Convention.

The Employers' members recalled that the Convention raised important and technical questions. The fundamental question of the coexistence of a public social security system with a new private system had already been addressed when the Committee had discussed the application of Conventions Nos. 35 to 40. None the less, it was possible to ask, in the light of the Convention, if the private system should be measured by the same criteria as the public system. If the reply was yes, the private system should fulfil the provisions of the Convention. The Government representative had not disputed the fact that the old public system had been totally insufficient and inadequate. According to the Government, it was for this reason that the public system had had to be substituted by the private one, but a worker who affiliated with the private system could not return to the public system. In any case, the application of the Convention was problematic because the public and private systems were both weak, and in this respect the Committee of Experts had raised doubts and had questioned whether the new system complied with the requirements of the Convention. In certain conditions, a private system of retirement or invalidity pensions might be more efficient than a public system. None the less, it did not appear to be the case with the current private system in Peru and the Government should modify both the public and private systems to conform with the provisions of the Convention.

The Government representative had provided a certain amount of information which should be included in the government report to the Committee of Experts for evaluation. With regard to the Government's suggestion that the Convention be modified, the Employers' members indicated that they had considered this. They recalled nevertheless that the Peruvian legislation needed modifying to bring it into conformity with the Convention. They asked the Government to send a complete report to the Committee of Experts so that it could examine all aspects related to the application of the Convention.

The Workers' member of Argentina stated that, as in 1994 and 1996, the Peruvian social security system was again being examined. He expressed his concern over the repeated observations of the Committee of Experts on the same matters in various Latin American countries, as well as for the unfulfilled government promises to rectify these problems and he demanded more concrete action to reduce the discrepancies between national law and practice on the one hand and the principles contained in the ILO Conventions on the other. He indicated that the progress of Latin American integration would be a mere economic entity and would not bring about social justice and equality if the social principles rooted in the ILO were not taken into account. The speaker stated that Convention No. 102 was flexible in order to permit a wide range of national solutions and easy adaptation to technical changes in protection. But despite this flexibility, the Government had not amended its legislation to the provisions of the Convention. He stressed that it was possible and acceptable that a country have both public and private systems for pensions. But Peruvian workers could not return to the state system once they were affiliated to a fund administrator. Furthermore, the public system was in a state of terminal crisis and it was clear that the possibility to freely choose between the two systems was only hypothetical. He also indicated that the problem of non-contribution by employers remained. It was necessary to avoid the spread of the Peruvian situation to other Latin American countries, as the primary evidence showed that exclusively private social security systems served only a few workers. Lastly, he asked that this case continue to be monitored, not only concerning the adaptation of standards but also concerning the results and effects, in order that the supervisory bodies could evaluate the evolution of these systems in the coming years.

The Workers' member of the United States warned against the dismantling and undoing of social security in the name of efficiency, modernization and the supposed absolute wisdom of the market. The problems faced by Peruvian workers, which were being discussed in the present case, were part of a much bigger dynamic affecting the whole of Latin America and the Caribbean. The debt restructuring conditions imposed by the major international financial institutions called for full-scale structural adjustment and privatization at the state level, and in its enterprises and services. These conditions contributed to the problems underlying the Peruvian case. He observed that the general funding crisis faced by modern States, especially in Latin America, had led to a crisis of faith in the social security concept. In fact, the idea of total privatization had gained support, with the effect that old-age protection had become prey to the unknown factors and inherent hazards of the market. This argument had prevailed in Chile, threatened the obras sociales in Argentina, had commenced by way of legislative Decree in El Salvador and was due to be put into effect in Mexico. Even in the United States, a number of multinational financial houses had been lobbying actively for the total dismantling of the social security system, using the argument of an underfunding crisis in the federally administered system.

The problems raised by the Peruvian case today had to be viewed in a broader perspective, in which the integrity of the social security concept was jeopardized at the national, regional and international levels. In fact, the general situation in the Peruvian case, including the reality that Peru's private scheme was coming to replace its public system, had created the specific problems which the Committee of Experts had addressed in its latest observation under the Convention. The Peruvian Government had agreed a couple of years ago that the private pensions system in Peru, in view of its principles and general characteristics, could not be included or analysed within the scope of the Convention. The Committee of Experts had already stated in its General Surveys of 1961 and 1989 that social security coverage could be subject to various approaches, thereby foreseeing the problem of an increase in the number of private schemes in the future. Moreover, in the case of Peru, the Committee of Experts had observed in February-March 1995 that, once Peruvian workers had registered with a private pension fund administrator, they could not opt back into the public system, which contributed to the tendency that the private system was effectively replacing the public system. The rationale of the Committee of Experts had been reinforced by the admissions of the Peruvian Government before the Committee last year, to the effect that the public system was collapsing and was unable to provide adequate coverage. He considered that the integrity of the public system had been mortally threatened by the Peruvian Government's evident lack of commitment to it and by the evident encouragement of the private option. He deplored the fact that, despite the Committee of Experts' request for information concerning the private pensions system and compliance with essential aspects of the Convention, the Government had confined itself to providing vague information, without addressing any of the critical issues.

Finally, he asked the Government to provide the information requested by the Committee of Experts. Only when such information was provided in full would a thorough evaluation be possible.

The Workers' member of France, agreeing with the comments of the Workers' members, wished to comment further on the system of old-age benefits in Peru. He recalled that the Convention was important both in terms of protecting the workers' social and economic rights and of setting the level of flexibility possible for its implementation. The problems facing Peruvian workers arose from experimentation with new forms of managing social security systems, in particular privatization. The difficulties in obtaining respect of their rights to receive a decent pension in the system to which they contributed were not unique, but that did not make them any less unacceptable. Trends towards dismantling systems based on the principle of solidarity, with mandatory participation from employers in financing and replacing them by private systems based on individual capital without mandatory employer contributions, were worrying and did not offer the guarantees required by the Convention. These private systems were, by their very nature, unpredictable because they relied in part on international financial speculation and on fluctuations in the financial markets. The returns could therefore fall below the levels set by the Convention. The fact that a State was prepared to assume the obligations of a private pension scheme that went bankrupt was not an adequate solution because, in such a case, the workers contributed twice to the system: once through the payment of contributions and a second time through their taxes. In addition, in private systems the benefit ceased once the individual accumulation was exhausted and this could mean that the old-age benefit was not really covered. In the many cases where wages were less than or just equivalent to the basic minimum, the workers were often not able to build up sufficient rights to ensure their basic needs in old age. This meant that the already wide gaps in society would become even wider. He considered that there was no need to revise the Convention, as the Government representative had suggested, in order to promote privatization and individualization of pension schemes. This instrument only set minimum principles and in no way restricted recourse to public, mixed or private systems as long as they respected the requirements of its provisions. The chosen system had to guarantee to workers the old-age benefits to which they were entitled. The public scheme in Peru should therefore be revitalized in order to ensure the entitlements of its members. He recalled that a public system could allow joint management and participation of the social partners in its administration, which was not possible in private systems. Appropriate measures had to be taken so as to ensure respect of the Convention independently of the choices made by the State. He asked the Government, as had the Committee of Experts, to send a detailed report on the measures taken so as to guarantee the rights to social security and a decent level of benefits. In the light of this information, the situation ought to be re-examined.

The Workers' member of Colombia stated that, contrary to appearances, many categories of the population were excluded from the application of the Convention and that the private pensions systems were not as they appeared: only well-paid workers in fixed employment could hope for an adequate annuity; this hope did not exist for workers in the informal sector and was not realistic for independent workers. Furthermore, the principles of integrity, solidarity and universality of benefit had not been fulfilled. The ILO should closely follow this and similar cases in Latin America.

The Government representative appreciated the various interventions and emphasized the balanced and thoughtful way in which the comments and criticisms had been formulated. He promised to transmit the various concerns to the Government in order that they would be addressed in the Government's next report.

The Committee noted the statements made by the Government representative and the debate which followed. The Committee shared the opinion that the coexistence in the social security system of both a public and a private system, as in the case of Peru since 1992, was not in itself incompatible with the Convention, which allowed the minimum level of social security to be attained through various methods. Nevertheless, the Committee expressed profound concern that, as the observations of the Committee of Experts and the debate appeared to show, the minimum levels of benefit for retirement and invalidity guaranteed by the Convention might not be guaranteed, either by the public or the private social security system, although for differing reasons. The Committee trusted that the Government would provide a detailed report in 1997, as requested by the Committee of Experts, so that the information provided could be examined in depth.

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Previous comments: Direct request (2019), direct request (2019)

In order to provide a comprehensive view of the issues relating to the application of the ratified Conventions on social security, the Committee considers it appropriate to examine Conventions Nos 12 (workers’ compensation in agriculture), 19 (equality of treatment – accident compensation), 24 (sickness insurance – industry), 25 (sickness insurance – agriculture) and 102 (social security – minimum standards) together in a single same comment. With reference to Conventions Nos 24 and 25 (instruments considered to be outdated by the ILO Governing Body), the Committee refers to its comments on Convention No. 102, the most up-to-date Convention on social security ratified by Peru (including Parts II and III).

The Committee notes the observations of the Autonomous Workers’ Confederation of Peru (CATP), received on 1 September 2023. The Committee requests the Government to provide its comments in this regard.

Article 1 of Convention No. 12. Extension of coverage to agricultural workers. The Committee notes the information provided by the Government in its report that on 3 June 2022 Presidential Decree No. 008-2022-SA2 updated Schedule 5 of Presidential Decree No. 009-97-SA, extending the list of activities considered to be high risk which are covered by the Supplementary Scheme for High-risk Work (SCTR). The Committee notes in particular the inclusion of the cultivation of vegetables and melons, root and tuber crops, as well as the cultivation of plants for the preparation of drinks. The Committee also notes the observations of the CATP indicating that when updating Schedule 5, agricultural activities that are fundamental for the national economy were left out, with the result that only 2 per cent of the agricultural workers who should be covered are actually protected. In this context, the Committee requests the Government to provide information on the number of workers protected by the SCTR in relation to the total number of agricultural workers.

Article 1(2) of Convention No. 19 and application in practice of the Convention. The Committee notes the information provided by the Government concerning the implementation in practice, as from June 2022, of the improved version of the Electronic System for the Notification of Employment Accidents, Hazardous Incidents and Occupational Diseases (SAT), following the adoption of Presidential Decree No. 006-2022-TR. The Committee also notes that, according to the information available in the SAT for the period from June 2022 to March 2023, there were a total of 1,162 accidents involving foreign workers, of which 1,151 were not fatal. The Committee notes the CATP’s observations, according to which the SAT only reflects notifications relating to formal workers, resulting in a clear under-reporting of cases involving foreign workers, for whom the informality rate is around 70 per cent. Finally, the Committee observes that the Government has not provided information on matters that were raised in its previous comment. In this context, the Committee once again requests the Government to provide information, if the existing statistics allow, on the approximate number of non-national workers on the national territory, as well as on their occupation and nationality. It also once again requests the Government to provide information on the compensation for employment accidents provided to workers who are nationals of other Member States that have ratified the Convention and to their dependants, within and outside the national territory, in the case of occupational accidents that occurred in Peru.

Part I (General provisions), Article 3 of Convention No. 102. Declaration appended to the ratification. The Committee notes the information provided by the Government on the Bill to reform the social insurance system in Peru, drawn up within the context of the Multisectoral Commission established by Presidential Decree No. 081-2022-PCM. The Committee also notes that the proposed reform is under discussion in a public consultation with the social partners on its implementation. The Committee requests the Government to provide information on whether the introduction of the reform of the social insurance system will result in the percentage of persons protected being achieved, which would mean that it could cease to avail itself of the exceptions under Article 3 of the Convention.

Part II (Medical care), Article 10(2). Cost-sharing by beneficiaries in the cost of medical care. The Committee notes that, according to the information provided by the Government, neither emergency care nor promotional preventive care are subject to cost sharing. The Committee further notes the CATP’s observations concerning the excessive share of the cost of health care and medicines borne by insured persons in health schemes. In this regard, the Committee once again requests the Government to provide detailed information on the application of the Convention in practice in relation to the cost sharing by beneficiaries for medical care, in both the public and private systems, such that it avoids hardship.

Part V (Old-age benefit), Article 27(d) in relation to Article 3. Persons protected. The Committee notes the information provided by the Government on progress in the implementation of the Pension 65 Programme, and the statistics on the number of protected employees working in industrial workplaces employing 20 persons or more. The Committee also notes that, according to the Government, the exception under Article 3 of the Convention in respect of the group of persons protected, as set out in Article 27(d) will have to be maintained until the implementation of the proposed reforms to the social insurance system in Peru. The Committee trusts that the implementation of the reform of the social insurance system will make it possible to renounce the use of the exception under Article 3 of the Convention, and requests the Government to provide information on this subject.

Article 28, in relation to Article 65. The rate of the benefit. The Committee notes the information provided by the Government in relation to the provisions indicated in its previous comment. The Committee also notes the observations of the CATP, according to which the contributory pensions of the National Pension System (SNP) do not ensure the minimum replacement rate of 40 per cent, due to a combination of increases in wages and the maximum ceiling of the pension, set at 893 soles, and that the Private Pension System (SPP) is not really designed as a pension system, as the rules allow almost the whole content of accounts to be withdrawn for non-pension-related reasons. Taking into account the context of the above reform of the social insurance system, the Committee trusts that measures will be adopted to ensure the minimum replacement rate of 40 per cent for the old-age benefits of the National Pension System and the Private Pension System, and requests the Government to provide information on this subject.

Articles 29(2) and 63(2). Reduced old-age benefit with a qualifying period of 15 years of contribution and reduced survivors’ benefit.The Committee requests the Government to provide its comments on the observations of the CATP in relation to these Articles.

Article 30. Provision of benefits throughout the contingency. The Committee notes the information provided by the Government concerning the publication in 2023 of Act No. 31670, which establishes minimum pensions and promotes alternative voluntary social insurance contributions, the purpose of which is to create a disincentive for registered persons to withdraw funds for reasons unrelated to social insurance and to ensure the receipt of a minimum retirement pension. The Committee notes the CATP’s observations which point to the defects of the Private Pension System by allowing the withdrawal of savings for reasons unrelated to social insurance, which occurred frequently following the adoption of the emergency decrees during the COVID-19 pandemic. Taking into consideration the context of the reform of the social insurance system, the Committee trusts that the implementation of the new social insurance system will make it possible to ensure that the Private Pension System complies with the obligation set out in this Article of the Convention, and requests the Government to provide information on this subject.

Part IX (Invalidity benefit), Article 56, in relation to Article 65. Rate of the benefit. The Committee notes the information provided by the Government on the guaranteed replacement rate in the pensions schemes of the National Pension System and the Private Pension System. The Committee also notes the CATP’s observations indicating that the existence of a low maximum pension ceiling makes it difficult in practice to comply with the replacement rate guaranteed by the Convention. With reference to the Private Pension System, the CATP indicates that in a country with a high rate of labour instability, the requirement to have paid contributions in four of the past eight months to be entitled to the benefit makes it difficult in practice to be in compliance with the Convention, as only active insured persons are protected. Considering the impact on the National Pension System and the Private Pension System of the current reform of the social insurance system, the Committee trusts that the implementation of the new system will make it possible to guarantee in practice compliance with this Article of the Convention, and requests the Government to provide information on this subject.

Part XIII (Common provisions), Article 70(1). Right of appeal of claimants of social security benefits. The Committee requests the Government to provide information on the average time that elapses for the resolution of procedures before the Administrative Social Insurance Tribunal.

Article 71(1) and (2). Collective financing of social security. The Committee trusts that the implementation of the new social insurance system will ensure compliance with this Article of the Convention, and requests the Government to provide information on this subject.

Articles 71(3) and 72(2). General responsibility of the State for the due provision of benefits and the proper administration of institutions and services. Health system. The Committee notes the information provided by the Government on the proposal by the social security health system (EsSALUD) to standardize social security health contributions, approved by the Executive Board of EsSALUD by Executive Board Decision No. 9-5-ESSALUD-2023, which will be referred to the Ministry of Labour. The Committee also notes the recommendations made in the EsSALUD Financial Actuarial Study 2018 prepared by the ILO. The Committee requests the Government to provide information on the effect given to the recommendations contained in the EsSALUD Financial Actuarial Study 2018, and on the impact of the proposal to standardize social security contributions in this context.

Articles 71(3) and 72(2). General responsibility of the State for the due provision of benefits and the proper administration of institutions and services. Social security. The Committee notes the statistical data provided by the Government. The Committee also notes the observations of the CATP concerning: (i) the number of reports of violations in compliance with contributions for compensation for periods of service; (ii) the different role played by the National Superintendence of Customs and Tax Authorities (SUNAT) in relation to contributions to the Social Insurance Standardization Office (ONP), with reference to the operation of the Private Pension System; and (iii) the debt with penalty interest of 28,550.32 million soles of the Private Pension System, according to the figures of the Superintendence of Banks and Insurers (SBS). The Committee requests the Government to provide its comments on these observations.

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Previous comments: observation (2010); direct request (2019).

The Committee notes the observations of the Autonomous Workers’ Confederation of Peru (CATP), received on 1 September 2023. The Committee requests the Government to provide its comments in this regard.

Article 1 of Convention No. 44. Establishment of an unemployment insurance system. The Committee notes the information provided by the Government in its report indicating that since 2020 a project has been under development entitled “Strengthening social protection in relation to unemployment in Peru”, which is executed by the ILO with the participation of the Ministry of Labour and Employment Promotion. According to the Government, ILO technical assistance is intended to promote the design and development of a complete protection system for unemployment, by improving the protection of workers in the event of the loss of their jobs and supporting the development of a new policy to improve employability. Finally, the Committee observes that on 3 July 2023 Bill No. 05510/2022-CR respecting the Unemployment Insurance Act was submitted to the Congress of the Republic. In this context, the Committee welcomes the efforts made, trusts that an unemployment insurance system will soon be established in conformity with the Convention, and requests the Government to provide information on the progress achieved in this respect.

Part XIII (Common provisions). Article 72(1) of Convention No. 102. Participation of insured persons in management. Health system. The Committee once again requests the Government to adopt the necessary measures to guarantee the right of insured persons to participate in a consultative capacity in the management of private institutions providing health services, in conformity with the requirements of the Convention.

The Committee is raising other matters in a request addressed directly to the Government.

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In order to provide a comprehensive view of the issues relating to the application of the ratified Conventions on social security, the Committee considers it appropriate to examine Conventions Nos 12 (workers’ compensation in agriculture), 24 (sickness insurance – industry), 25 (sickness insurance – agriculture) and 102 (social security – minimum standards) together. With regard to Conventions Nos 24 and 25 (instruments considered to be outdated by the ILO Governing Body), the Committee refers to its comments on Convention No. 102, the most up-to-date Convention on social security ratified by Peru (including Parts II and III).

The Committee notes the observations of the Autonomous Workers’ Confederation of Peru (CATP) on the application of Conventions Nos 12, 24, 25 and 102, received in 2016.

Article 1 of Convention No. 12. Extension of coverage to agricultural workers. In its previous comment, the Committee requested the Government to indicate whether the proposed amendment to extend the list of activities covered by the Supplementary Insurance Scheme for Hazardous Work (SCTR) with a view to including a certain number of agricultural activities in Annex V of the Regulations issued under Act No. 26790 on the modernization of social security for health care, as approved by Presidential Decree No. 009-97-SA of 1997, had been adopted, and whether there were plans to continue extending protection against employment injury to other categories of agricultural and industrial workers with a view to progressively achieving full coverage. The Committee notes the Government’s indication in its report that the Ministry of Agriculture has reported that Presidential Decree No. 009-97-SA still does not include in Annex V categories of agricultural workers, and only includes work relating to the extraction of wood and veterinary work. The Committee also notes the Government’s indication that Presidential Decree No. 008-2010-SA, issuing the Regulations under Act No. 29344, the Framework Act on universal health insurance, provides in section 105 that the coverage of the SCTR shall be granted to all persons who work, in accordance with section 19 of Act No. 26790 of 1997 on the modernization of social security for healthcare, and that the Ministry of Health shall approve the progressive implementation of the list set out in Annex V with a view to its universal application. The Committee also notes the observations of the CATP which refers to the difficult conditions faced by workers in the agro-industrial sector, “which not only give rise to diseases and health problems that do not enable them to work properly, but are a threat to their personal safety and survival”. The Committee notes this information and requests the Government to report any developments relating to the inclusion of categories of agricultural workers in Annex V of Presidential Decree No. 009-97-SA of 1997.

Part I (General provisions). Article 3 of Convention No. 102. Declaration appended to the ratification. In its previous comments, the Committee requested the Government to provide information, in accordance with Article 3 of the Convention, on the measures adopted to progressively extend the scope of the persons covered, with an indication of whether the reasons for maintaining reduced coverage subsist (50 per cent of the workers in enterprises with more than 20 employees, as declared by the Government at the time of ratification), or whether it renounces the right to avail itself of this exception in future. The Committee notes the Government’s indication that, by means of: Act No. 28015 of 2003 to promote and formalize micro and small enterprises; Legislative Decree No. 1086 of 2008 approving the Act to promote the competitiveness, formalization and development of micro and small enterprises and access to decent work; Presidential Decree No. 008-2008-TR; and Presidential Decree No. 013-2013-PRODUCE, it is intended to extend coverage by social protection for workers in micro and small enterprises, setting registration with the comprehensive health insurance scheme (SIS) as the minimum floor for microenterprises, the social security health system (EsSALUD) for micro and small enterprises and, in relation to social insurance, the possibility to register with either the national pensions system (SNP) or the private pensions system (SPP), or also with the social pensions system (SPS). However, the Committee notes the Government’s indication that the SPS, governed by Legislative Decree No. 1086 of 2008, has not yet been established as regulations have not yet been issued. In light of the legislative developments in relation to micro and small enterprises through Presidential Decree No. 013 2013-PRODUCE, the Committee requests the Government to provide information on the measures adopted or envisaged to give effect to this legislation. The Committee requests the Government to indicate whether the implementation of the legislation will result in an increase in the percentage of persons protected which will mean that it can renounce the exceptions of which it is availing itself under Article 3 of the Convention in relation to Articles 9(d), 12(2), 15(d), 18(2), 27(d), 48(c) and 55(d). The Committee also once again requests the Government to indicate whether it intends to avail itself in future of the exception envisaged in Article 3, in accordance with the Convention.

Part II (Medical care). Article 10(2). Cost-sharing by beneficiaries for medical care. The Committee requests the Government to provide detailed information on the application of the Convention in practice in relation to the cost-sharing by beneficiaries for medical care, such that it avoids hardship, both for the public health system (Essential Health Insurance Plan – PEAS – and the comprehensive health insurance scheme – SIS), and for private health insurance schemes.

Part V (Old-age benefit). Article 27(d) in relation to Article 3. Persons protected. With reference to its previous comments relating to the principle of guaranteed minimum benefits, the Committee requested the Government to provide information on the measures taken to extend the Pension 65 Programme to all regions of the country, together with details of its implementation and the progress made in this regard. The Committee notes the Government’s indication that the Pension 65 Programme began by being introduced progressively in the poorest areas of Peru and that, in accordance with the single final supplementary provision of Presidential Decree No. 006-2012-MIDIS of 2012, the coverage provided by the programme was extended to persons living in the departments in which the “Gratitud” Pilot Solidarity Assistance Programme was operating, until it covers the whole of the country, and that according to 2016 data, a total of 196 provinces and 500,000 people are covered. The Committee welcomes the positive information provided and requests the Government to continue providing information on any progress achieved in the implementation of the Pension 65 Programme, and particularly on the extension of the number of persons protected. In this regard, the Committee requests the Government to indicate whether the possibility of renouncing the exceptions declared under Article 3 of the Convention has been examined. The Committee also requests the Government to provide statistical data on the number of protected employees who work in industrial enterprises with at least 20 workers, in relation to each pension scheme, with a view to assessing the application of Article 27(d) of the Convention in relation to the exception declared under Article 3 of the Convention.

Article 28, in relation to Article 65. Rate of the benefit. In its previous comment, the Committee requested the Government to provide information on the minimum amount of each type of pension referred to in comparison with the minimum replacement rates set out in the Convention, and to indicate how such amounts are adjusted. The Committee notes the Government’s indications that the provisions which over time have been regulating the manner in which the reference wage is calculated are: Legislative Decree No. 19990 of 1973, which created the National Social Security Pensions System, section 73; Legislative Decree No. 25967 of 1992; and Presidential Decree No. 099-2002-EF in relation to the SNP. The Committee observes that these texts also regulate the rate of the benefit. In relation to the SPP, the Committee noted previously the Government’s confirmation that a replacement rate is not guaranteed in the SPP. The Committee recalls that Article 65 of the Convention provides that the rate of the benefit, or the replacement rate of the benefit, increased by the amount of any family allowances payable during the contingency, shall be such as to attain, for the standard beneficiary indicated in the Schedule appended to Part XI of the Convention, at least 40 per cent of the total of the previous earnings of the beneficiary and of the amount of any family allowances payable to a person protected with the same family responsibilities as the standard beneficiary. The Committee therefore requests the Government to provide statistical data so that it can fully assess the extent to which the old-age benefits of the SNP attain the level prescribed by the Convention. More specifically, the Committee requests the Government to indicate: (i) the amount of the wage of the skilled manual male employee selected; and (ii) the amount of benefit granted during the time basis and the amount of family allowances, if any, payable during employment and during the contingency, for the spouse, for a period equivalent to the time basis.

Finally, the Committee requests the Government to provide information on any measures that it has been considered appropriate to adopt in relation to the SPP to give effect to these Articles of the Convention.

Articles 29(2) and 63(2). Reduced old-age benefit with a qualifying period of 15 years of contribution and reduced survivors’ benefit. The Committee notes the allegation by the CATP that the Insurance Standardization Office (ONP) denied old-age pensions in 2013 to 21,560 people who could not demonstrate at least 20 years of contribution. The Committee notes the Government’s indication that, starting with the entry into force in 1992 of Legislative Decree No. 25967, the minimum period of contribution required for entitlement to the pension was set at 20 years for both men and women for the general scheme. The Committee also observes that section 51 of Legislation Decree No. 19990 of 1973 provides that, for entitlement to a survivors’ benefit, the deceased insured person must have been entitled to an old-age or invalidity pension. The Committee requests the Government to report on the manner in which effect is given to Article 29(2) of the Convention, which provides that where the benefit is conditional upon a minimum period of contribution or employment, a reduced old-age benefit shall be secured after a qualifying period of 15 years, as well as Article 63(2)(a) respecting the provision of a reduced benefit to a person protected whose breadwinner has completed, in accordance with prescribed rules, a qualifying period of five years of contribution.

Article 30. Provision of benefits throughout the contingency. In its previous comment, the Committee noted that the old-age benefits managed within the private administration system are calculated on the basis of the capital accrued in the individual accounts of each insured person. Once the capital is exhausted, the entitlement to a pension may cease to exist and insured persons who exceed the average life expectancy could be deprived of their sole source of income (see section 45, programmed retirement, of the single harmonized text of the Act on the private system of administration of pension funds, approved by Presidential Decree No. 054-97-EF). The Committee concluded that such a situation is not consistent with the principle laid down in international Conventions whereby benefits are to be paid throughout the contingency at a guaranteed minimum rate. The Committee also notes the Government’s reference to Act No. 30425 of 2016, amending the single harmonized text of the Act on the SPP, and the 24th final and transitional provision of the single harmonized text of the Act on the SPP, under the terms of which an insured person as from 65 years of age is entitled to “choose between the provision of the pension to which she/he is entitled under any retirement system”, or apply to the pension fund administrator (AFP) to “provide up to 95.5 per cent of the total funds available in her/his individual capital account (CIO)”. An insured person who adopts this option shall not be entitled to any guaranteed state benefit, and this includes insured persons covered by the special early retirement scheme (REJA). The Committee recalls that Article 30 of the Convention requires that old-age benefits shall be granted throughout the contingency. The Committee requests the Government to provide information on any measure that it is considered appropriate to adopt in relation to the SPP to ensure that it complies with the requirement set out in this Article of the Convention.

Part IX (Invalidity benefit). Article 56 (in relation to Article 65). Rate of the benefit. The Committee requests the Government to indicate whether the rate of invalidity benefit attains, irrespective of the type of pension selected (in the SPP or SNP), the percentage set out in the Convention for a standard beneficiary.

Part XIII (Common provisions). Article 70(1). Right of appeal of claimants of social security benefits. In its previous comments, the Committee requested the Government to provide information on the repercussions in practice of the ruling in Case No. 05561 2007 PA/TC of 24 March 2010, in which the Constitutional Court (TC) found that the participation of the Insurance Standardization Office (ONP) in court proceedings pertaining to the payment of statutory or accrued interest on pensions to be an “unconstitutional state of affairs”. The Committee also urged the Government to speed up the process of the assessment and payment of benefits due to workers by simplifying complaint and appeal procedures. The Committee notes the Government’s indication that all processes relating to the payment of statutory and accrued interest have been settled in accordance with the ruling of the Constitutional Court and notes a list of cases attached. The Committee also notes with interest the information provided by the Government on the creation of the Administrative Tribunal on Social Security with a view to making appeal processes more flexible, and hopes that this development will make it possible to give effect to the right of persons protected to lodge complaints and appeals, as envisaged in the Convention. The Committee requests the Government to provide information on the time limits for dealing with cases, the rules applicable in the event of appeal and the merits of complaints and appeals to the Administrative Tribunal on Social Security.

Article 71(1) and (2). Collective financing of social security. In its previous comments, the Committee requested the Government to explain the extent to which the principle of the collective financing of social security is given effect in the national pensions system. The Committee notes the confirmation by the Government that in the SNP, which forms part of the public pensions system, contributions are entirely borne by insured persons, in accordance with section 2 of the Second Transitional Provision of Act No. 26504 of 1995 adopting modifications, among others, to the SNP and the private pension fund system. The Government indicates that the employer only acts as an agent for the deduction of contributions. The Committee recalls that it noted previously that, also in the private pensions system, contributions are only made by insured persons to individual capital accounts and for the financing of premiums for old-age, invalidity and survivors’ insurance, and that the administrative costs are solely borne by workers registered with the AFP. The Committee wishes to recall once again that Article 71 of the Convention provides that the cost of social security benefits and the cost of the administration of such benefits shall be borne collectively by way of insurance contributions or taxation in a manner which avoids hardship to persons of small means (paragraph 1) and such that the cost of the total of the insurance contributions borne by the employees protected shall not exceed 50 per cent of the total of the financial resources allocated to the protection of employees and their wives and children (paragraph 2). The Committee requests the Government to indicate the origin of the resources for each system examined for each of the Parts of the Convention that have been accepted, with an indication in particular of the rate or the amount of the deductions made from earnings to finance the system, either through contributions or taxation, and the insurance contributions borne by the employees protected.

Articles 71(3) and 72(2). General responsibility of the State for the due provision of benefits and the proper administration of institutions and services. Health system. In its previous comments, the Committee observed that Act No. 29344 of 2009 provided for at least nine alternatives for insurance in the health branch, administered by public, private and mixed bodies, and it suggested that the Government examine the possibility of a simplification of the system to achieve the harmonization and rationalization of health services. The Committee notes the allegation by the CATP concerning the high level of fragmentation of health schemes, with the coexistence of various systems which suffer from a lack of communication between them and that this situation is an obstacle to the achievement of economies of scale and is a source of inequality. The CATP also alleges that there are inefficiencies in the comprehensive health insurance scheme (SIS) intended for persons living in poverty and extreme poverty and that important weaknesses have been identified in the framework of the EsSALUD insurance scheme, such as the approval of special contribution schemes for specific groups who are not vulnerable, which has a negative impact on the income of EsSALUD. The Committee requests the Government to provide information on the measures adopted with a view to improving the administration of health services. It also requests the Government to indicate the measures adopted to improve effective access to health services, and more specifically to explain how the provision of medical care and sickness benefit is guaranteed in the manner and at the levels required by the Conventions for all persons protected.

Articles 71(3) and 72(2). General responsibility of the State for the due provision of benefits and for the proper administration of institutions and services. Social security. In its previous comment, the Committee observed that the obligation to improve the collection of social security contributions falls within the State’s general responsibility for the proper administration of social security institutions and services under the terms of Article 72 of the Convention and it requested the Government to intensify its efforts on the issues of the payment of contributions by employers, to reinforce collaboration between social security institutions and the tax authorities, and to provide information on the legislative progress achieved with regard to the bills proposing that the National Supervisory Authority for Tax Administration (SUNAT) takes over the functions of the collection of contributions and inspection for the SNP and the SPP. The Committee notes with interest the Government’s indication concerning the creation of the National Supervisory Authority for Labour Taxes (SUNAFIL), through which it has been possible to increase efforts to ensure compliance in the areas referred to above. The Committee notes that the SUNAFIL has concluded two agreements for inter-institutional cooperation with the EsSALUD and the SUNAT for the purposes, among others, of developing mechanisms and procedures of inter-institutional cooperation, the exchange of information on the processes developed by the various institutions and the establishment of joint supervisory and/or inspection of compliance with social security obligations. The Committee also notes the information provided by the Government that, according to the reports of the Labour Inspection Information System (SIIT), the Labour Inspection System (SIT) has issued a number of inspection orders and guidance on the registration of workers with the social security system. The Committee requests the Government to continue providing statistical data on the results achieved by the SUNAFIL and the action of the SIT in combating evasion of the requirement for registration with the social security system and in improving the collection of contributions in practice, and to provide information on any other measures adopted or envisaged to attain these objectives.

Article 72(1). Participation of insured persons in management. Health system. In its previous comment, the Committee requested the Government to examine the possibility of the establishment in private health providers (EPS), institutional providers of health services (IPRESS) or private health insurance companies of a mechanism through which representatives of insured persons could participate in their management or be associated with them in an consultative capacity, without prejudice to the public oversight mechanisms that may be established in due course by regional or local governments, with a view to bringing the legislation into accordance with Article 72(1) of the Convention. The Committee notes the allegation by the CATP that, in the health sector, the participation of insured persons is not envisaged in health insurance fund administrators (IAFAS), EPS, IPRESS, or private health insurance companies. The Committee once again requests the Government to indicate the measures adopted or envisaged in the private health insurance sector in relation to the right of the representatives of the persons protected to participate in their management or to be associated with them, in a consultative capacity, in accordance with the required conditions.

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The Committee notes the report submitted by the Government on 3 September 2010; the comments submitted on 14 September 2010 by the Coordinator of the Trade Union Federations CUT–GCTP–CTP–CATP; the comments submitted on 28 August 2010 by the General Confederation of Workers of Peru (CGTP); the Government’s reply of 15 October 2010 to the observations made by the Coordinator of the abovementioned federations; the comments of 18 November 2010 by the National Confederation of Private Business Institutions (CONFIEP) (Chamber of Commerce of Lima); the Government’s new report submitted on 19 September 2011; the comments on the Government’s new report submitted on 23 September 2011 by the Single Confederation of Workers of Peru (CUT). The Committee thanks the Government and the social partners for having maintained a substantial and constructive dialogue on the questions raised in its general observation regarding all the social security Conventions ratified by Peru (Nos 12, 19, 24, 25, 35 to 40, 44 and 102). The Committee trusts that the dialogue will facilitate formulation of a national strategy for the consolidation and sustainable development of the social security system that will enable the State to make full use of the potential afforded by international social security standards, with a view to securing sound administration of social security schemes and gradually extending coverage to the whole population. In this context, the Committee wishes to draw the attention of the Government and other interested parties to the following matters:

1. Observance of the basic principles laid down by the international Conventions on social security

The Committee notes the opinion expressed by the CGTP, which is reflected in the General Survey of 2011 on social security instruments (paragraph 545), namely, that as a result of a strong tendency towards privatization in the 1990s, the social security system violates the principle of collective financing of benefits, both in the private system and in the public system; the level of the benefits paid is not sufficient to guarantee minimum compensation throughout the contingency and there are no technical criteria for the adjustment of pensions; there is no democratic participation of workers in the administration and management of social security; there are serious deficiencies in the mechanisms for complaint and appeal concerning entitlement to social security benefits. In view of these repeated allegations, the Committee considers that the Government needs to draw on all its technical knowledge to review the structure of the national social security system in the light of the fundamental principles of good governance established by the international community during the past 60 years, namely:

The principle of collective financing of social security. According to this principle, the cost of benefits and the cost of administering them shall be borne collectively by way of contributions or taxes (Article 71(1) of the Convention), and the total of the insurance contributions borne by the employees protected shall not exceed 50 per cent of the total of the financial resources allocated to the protection of the employees (Article 71(2)). In contradiction with this principle, under Peru’s Private Pension System (SPP) only the insured contribute to individual capitalization accounts and the financing of old-age, invalidity and survivors’ insurance, and the administration costs are borne solely by workers affiliated to the Administrators of Private Pension Funds (AFPs). As to the National Pension System (SNP), the Government stated in its report of 3 September 2010 that this system “is based on contributions and solidarity on the part of workers and employers”, and that according to Legislative Decree No. 19990, Title III, section 6 and the amendments thereto, the system is financed by contributions from employers and employees. However, in its reply of October 2010 to the comments of the trade union federations, the Government states that the laws governing the SNP establish that the obligation to contribute falls entirely on the workers. What is more, the website of the National Supervisory Authority for Tax Administration (SUNAT) states that contributions to the Office of Standards for Welfare (ONP) (which administers the SNP) will be borne by the employee and that the employer’s role is merely to deduct contributions at source. In view of these conflicting statements, the Committee would be grateful if the Government would explain the extent to which the principle of the collective financing of social security is observed for the SNP.

Principle of democratic administration of the social security system. According to this principle, where administration is not entrusted to an institution regulated by the public authorities or by a government department accountable to Parliament, representatives of persons protected must participate in the administration or be associated and have advisory powers (Article 72(1)). The SPP affords its members no opportunity to participate in the management of the AFPs. In its report of 2010, the Government stated that it planned to examine the possibility of establishing a supervisory board, in which representatives of SPP members would participate, along the lines of the Supervisory Board provided for in Legislative Decree No. 862 respecting Investment Funds and their Administrators, and which would be able to collect information on pension fund administration from the AFPs. However, in its last report of 2011 the Government gives no account of any progress in involving representatives of the insured in the administration of the AFPs, at least in a consultative capacity. According to the CUT, there was no tripartite consensus on the SPP reforms and the objectives established were not met. The Committee observes that, paradoxically and by contrast, in the SNP the Government reinforces participation by representatives of the insured in the government bodies of the system. Thus, pursuant to section 16 of Legislative Decree No. 817 of 1996 (law on state social security), a Consolidated Pension Reserve Fund has been set up with an administrative board that includes two representatives of the pensioners, who are proposed by the National Council for Labour and Employment Promotion (CNTPE) and appointed by a decision of the Ministry of the Economy and Finance. In view of the Government’s wish to promote the principle of shared management in the SNP, the Committee would be grateful if the Government would explain to what extent provision is made for applying the principle to the SPP so as to allow participation by representatives of persons insured under the AFPs, in accordance with Article 72(1). As to participation by protected persons in the administration of health insurance, the situation is much the same as that of participation by beneficiaries in the SNP. However, the Committee notes that in the case of private insurers such as private institutional administrators of health insurance funds (IAFAS), health provider entities (EPS), institutional providers of health services (IPRESS) or private health insurance companies, no provision is made for insured persons to participate in administration. According to information on the National Supervisory Authority for Health Insurance (SUNASA) website, the EPS, which are established under the Act to Modernize Health Social Security (No. 26790), may be private, public or mixed, and their function supplements that of EsSalud, the health social insurance system. They are supervised directly by the Supervisory Authority for Health Provider Entities (SEPS) pursuant to the fourth supplementary provision of Decree No. 009-97-SA, which regulates Act No. 26790 mentioned above, though there is no requirement for private or mixed EPSs to appoint representatives of insured persons to participate in their administration. As to EsSalud, an autonomous decentralized public body responsible for administering the Health Social Insurance Contribution Scheme, the Government states in its 2011 report that the Board of EsSalud is made up of representatives of the State, employers and insured persons, the latter consisting of representatives of public sector workers, private sector workers and beneficiaries. The Committee notes with interest that the principle of shared management, laid down in the Framework Act on Universal Health Insurance, is defined as “the exercise of citizenship in the formulation and monitoring of universal health insurance policies”. Section 9 of the Regulations to that Act provides that the Ministry of Health (MINSA) shall establish the public oversight mechanisms to be developed by regional and local governments with a view to allowing people to exercise their rights under universal health insurance. Accordingly, MINSA issued Resolution No. 040 2011 establishing general policy guidelines for public oversight. However, the document mentions several Public Oversight Committees established by the Health Ombudsman while recognizing that there is no evidence as yet that they are operating at national level. These public oversight mechanisms, which are to be established by regional and local governments, will pay particular attention to universal health insurance in terms of observing the guarantees of quality, suitability and financing, without prejudice to the competence of the SUNASA. The Committee observes that these public oversight mechanisms could act in supplementary capacity but do not obviate the need to appoint representatives of insured persons in IAFAS. The Committee accordingly asks the Government to envisage the possibility of establishing a mechanism in private EPS, IPRESS, or private health insurance companies, enabling representatives of the insured to participate in the administration of these bodies or to be associated with them, in a consultative capacity, without prejudice to the public oversight mechanisms that regional or local governments may establish in due course, so as to bring the legislation into line with Article 72(1) of the Convention.

Principle of guaranteed minimum benefits. The Committee points out that the introduction of guaranteed minimum pensions should be accompanied by the establishment of a poverty line or a subsistence minimum and the increase of the minimum pensions above this parameter. The Committee is concerned by the fact that social security schemes, which are naturally designed so as to provide adequate benefits, have degenerated in many developing countries to the point that benefits are paid at levels below the poverty line; in such cases the State may be seen to be failing to fulfil its responsibilities (see General Survey of 2011 on social security instruments, paragraphs 459 and 460). The Committee notes in this context the information supplied by the Government to the effect that there are different ways of calculating pensions depending on whether they are granted under Legislative Decree No. 19990, Act No. 25967 or Act No. 27617. Pensions under Legislative Decree No. 19990 are calculated on the basis of the average insurable remuneration of the insured person and according to the number of years of contributions. Under Act No. 25967, the amount of pensions granted to insured persons who show that they have contributed for 20 full years shall be equal to 50 per cent of their reference remuneration (section 2 of the Act provides for three different methods of calculating reference remuneration based on the number of years of contributions), and under Act No. 27617, the reference remuneration is determined on the basis of the average remuneration of the 60 months preceding the last month of contribution, and the amount of the pension is determined on the basis of a table, which was not sent with the Government’s report. The Government confirms in its report of 2011 that in the SPP there is no guaranteed replacement rate. In the SNP, on the other hand, payment of pensions is insured and guaranteed by the ONP, the Consolidated Pension Reserve Fund and the national Government through the transfer of funds from the Treasury’s regular budget. However, the CUT asserts that the amount of the pensions paid is below the minimum threshold established in Convention No. 102 for wage replacement. The Committee accordingly asks the Government to indicate the minimum amount of each type of pension mentioned above as compared to the minimum amount laid down in the Convention, and to state how the amounts are updated.

The Committee also notes the measures under way to increase SNP pensions, in particular section 4(a) of Act No. 28449 providing that pensions granted under Legislative Decree No. 20530 shall be increased for beneficiaries aged 65 and over, taking account of annual cost of living trends and the financial capacity of the State. The Committee also notes in this context the forthcoming implementation of the “Pension 65 Programme”, initially to be run by the Presidency of the Council of Ministers, under which a non-contributory pension of 225 soles (PEN) (equal to approximately US$90), with an initial budget of PEN225 million, will be granted to persons aged 65 and over who have never contributed, and which will in principle be limited to the poorest regions in the country. The Committee is bound to stress the advantages to be gained from extending the system of guaranteed lower pensions to all persons of a certain age, which would enable the State to guarantee a reduced minimum old-age pension for all persons whose old-age benefits have suffered unduly, particularly as a result of the present economic and financial crisis. The Committee asks the Government to provide information in its next report on the measures it plans to take in order to extend the Pension 65 Programme to all regions of the country, together with details of its implementation and progress made.

The Committee notes the actuarial assessment, mentioned by the Government in its report, conducted by the Ministry of the Economy in connection with the extension of a minimum pension to all low-income residents with a minimum of 15 years of contributions, with the aim of assessing the impact of the measure recommended by the Committee of Experts for the introduction of a pension consistent with Article 29(2) of the Convention. The Committee asks the Government to provide a copy of the actuarial assessment conducted by the Ministry of the Economy.

The Committee notes the information supplied by the Government to the effect that in 2009, the SNP’s Consolidated Pension Reserve Fund broke even, in that it exceeded the maximum level reached prior to the 2008 crisis. As to the SPP, the Supervisory Authority for Banking, Insurance and AFPs has indicated that pension funds have been recovering and have even exceeded the maximum level reached prior to the international crisis. The Committee notes the Government’s rather optimistic evaluation to the effect that the pension system appears to have overcome the negative effects of the financial crisis. The Committee would be grateful if the Government would confirm that this is indeed the present status of the pensions system, and to indicate the measures taken or envisaged to support persons who were compelled to retire at the height of the crisis and who sustained heavy losses in their pensions.

Principle of granting benefits throughout the contingency. The old-age benefits managed under the private administration system are calculated on the basis of the capital accrued in the individual accounts of the insured. Once that capital is exhausted, the entitlement of the individual account holder may cease to exist and insured persons exceeding the average life expectancy could be deprived of their sole source of income (see section 45, “Programmed Retirement” of the Act (Single Harmonized Text) on the Private Pension System). Such a situation is not consistent with the principle laid down in international Conventions whereby benefits are to be paid throughout the contingency at a guaranteed minimum rate.

2. Improving the operation of the public pension system

In its previous observation the Committee took note of allegations that no up to date record of members’ contributions exists and that the burden of proof regarding the contributory period lies not with the ONP but with the insured person and that procedures for granting pensions are extremely complex. In its report the Government refers to various measures taken by the ONP that have led to improvements in the way the State administers social security. Noteworthy among these are: the substantiation of decisions; improvement of the checking and accreditation of contributions in that failure by the employer to deposit with the ONP the contributions withheld from wages does not affect workers, who need only present their work certificates in order to obtain the benefit from the ONP; the efforts made to operate a single contributions register (RIA) and the adoption of measures to optimize computer systems; measures to simplify the processing of benefits due – the process consisting of 11 stages has been replaced by a four-stage process. However, the Committee notes the information supplied by the CUT to the effect that in around 15,000 cases, pension processing took more than 306 days on average, and that over 90,000 files were awaiting “rubber stamping”, i.e. recognition of the pensioners’ eligibility. The CUT further states that the ONP’s unwarranted refusal to entertain beneficiaries’ claims and the role played by the external legal advisers hired by the ONP were responsible in part for the fact that claimants had to apply to the courts to assert their pension rights.

The right to have a recourse duly examined has been considered by the Committee as falling under the general responsibility of the State to guarantee the proper administration of social security institutions. Any dysfunctions in social security recourse procedures therefore have to be duly addressed by the State in conformity with the principles guaranteed by international social security law. The Committee has also observed in this respect that the existence of appropriate recourse procedures should not be used abusively by forcing beneficiaries to file claims against decisions systematically denying their right to benefits. The Committee points out in this context that according to Article 71(1) of the Convention, claimants shall have a right of appeal in case of refusal of the benefit or complaint as to its quality or quantity (see General Survey of 2011 on social security instruments (paragraph 433)). The Committee accordingly observes that the ONP’s unwarranted refusal to entertain the applicants’ claims offends against the right of claimants to have access to simple and rapid complaint and appeal procedures, particularly where simplicity and promptness in such proceedings are essential because in most cases the claims are for social security benefits that constitute the claimants’ sole economic support. The Committee further points out that the general principles laid down in international social security instruments, which call for recourse procedures to be simple and rapid, also militate in favour of the harmonization of the applicable procedural law throughout dispute settlement procedures in social security matters. Dispute settlement bodies should therefore ensure that individual claimants have reasonable opportunities to assert or defend their rights. The Committee notes in this connection the ruling on Case No. 05561-2007-PA/TC of 24 March 2010, in which the Constitutional Court found the ONP’s participation in court proceedings pertaining to payment of statutory or accrued interest on pensions to be an “unconstitutional state of affairs”, and ordered the ONP to waive such proceedings. This decision by the Constitutional Court is of great significance as the ONP will have to waive proceedings that concern the payment of statutory or accrued interest, which will allow cases to be dealt with more expeditiously. Citing the Constitutional Court’s ruling, the CUT also states that the ONP should likewise desist from challenging workers’ court claims pertaining to evaluation and payment of old-age benefit, since the proceedings in such cases are cumbersome and delay the effective exercise, by thousands of workers, of the right to receive old-age benefit. The Committee therefore asks the Government to provide information on the repercussions the abovementioned ruling of the Constitutional Court has had in practice, and urges the Government to speed up the process of evaluation and payment of benefits due to workers by simplifying complaint and appeal proceedings, thereby giving effect to Articles 70(1) and 72(2) of the Convention.

3. Combating evasion of the obligation to join the social security system

According to a study conducted by the ILO (2009), in 2007 only 35 per cent of the wage earning economically active population had old-age, invalidity and survivors’ coverage. As regards health protection, only 36 per cent of the total population was covered. Overall, these figures reflect the worrying situation that has arisen due to evasion of the obligation to belong to the social security system, especially on the part of large enterprises in the formal economy, and indicate a need for the State to reinforce significantly the supervision carried out by the national body responsible for the collection of taxes and social contributions, SUNAT. The Committee also notes the measures undertaken by the Government to improve collection and supervision in respect of the payment of contributions by employers by setting up a unit in EsSalud to monitor the debiting and auditing practices of employers that are supervised and audited by SUNAT. The Committee also notes the efforts made by EsSalud to get SUNAT to attach greater importance to the Strategic Plan to supervise taxes and monitor payment of contributions, and the Inter-institutional Cooperation Agreement concluded with the Ministry of Labour and Employment Promotion (MTPE), whose objectives include measures to improve the detection of practices by employers that affect workers’ access to payroll records and health social security. The Government also refers to the MTPE’s efforts to bring the workforce into the formal economy through inspection, which have led to a significant increase in the social security contributions collected in recent years. The Government also reports that a Technical Committee analysed measures to improve the SNP and the SPP and enable the two systems to coexist in the medium and long term, thereby extending the level of coverage.

While noting the measures taken by the Government to curb social security evasion by setting up close cooperation between social security institutions and other public services responsible for supervision and enforcement, such as the tax authorities and the labour inspectorate, the Committee is bound to stress the magnitude of the problem the Government has to tackle given the extent of social security evasion. According to information provided by the CUT, the classification of offences and the penalties for social security evasion by employers are not sufficiently dissuasive. In the SPP, every month AFPs file 8,000 complaints with the courts against enterprises that fail to record employees’ pension contributions, and up to the year 2008, 300,000 complaints had been lodged against enterprises that deducted their workers’ contributions but failed to transfer them to AFP individual capitalization accounts. The CUT also refers to two bills (2866-2008CR and 2890-2008-CR) proposing that SUNAT take on the collection and auditing duties pertaining to AFPs, so that there would be a single social security register covering the SPP and the SNP. The Committee points out that the obligation to improve collection of social security contributions falls within the State’s general responsibility for the proper administration of the institutions and services involved, in accordance with Article 72 of the Convention. The Committee accordingly asks the Government to step up its efforts to secure supervision of the payment of contributions by employers, to adopt measures to prevent non-compliance by intensifying inspection, and to secure closer cooperation between social security institutions and the tax authorities (such as the measures proposed by EsSalud to SUNAT). The Committee also asks the Government to provide information on the progress through Parliament of the abovementioned bills that seek to make SUNAT responsible for collection and supervision in both systems (SPP and SNP).

The Committee welcomes the promulgation of the Framework Act on Universal Health Insurance, No. 29344 (“AUS Framework Act”) laying the foundations for the extension of health insurance to all residents in Peru, so as gradually to achieve universal coverage based on solidarity and participation. The Committee nonetheless observes that because there are so many health service providers, whether public, private or mixed, it is difficult to secure sound administration of all the service providers participating in the universal health insurance process. It should be pointed out that the law establishes a National Health Insurance Supervisory Authority responsible for safeguarding and guaranteeing the right of every person to full and progressive access to health insurance based on the principles of universality, solidarity, unity, comprehensiveness, equity, irreversibility and participation. It is nonetheless worth noting that while in the rest of the world there is a trend towards unification of health service providers, the AUS Framework Act provides for at least nine options for insurance, by public, private or mixed bodies. The Committee suggests that the Government might look into simplifying the provision of health insurance in the interests of harmonizing and rationalizing health services and so contribute to better administration and greater efficiency in such services. It also asks the Government to send information on the progress made in extending the coverage of universal health insurance, by economic sector and geographical region.

4. Measures for micro and small enterprises

The Committee recalls that when Peru ratified this Convention in 1961, it availed itself of the possibility that the Convention affords to any Member whose economy and medical facilities are insufficiently developed, of applying the provisions to only 50 per cent of the workers in enterprises with more than 20 employees instead of 50 per cent of all employees (Article 3 of the Convention). States that opt for the abovementioned exception must indicate in their periodical reports the measures taken progressively to extend the scope of the persons covered, specifying whether the reasons for maintaining reduced coverage subsist, or stating that they renounce the right to avail themselves of the exception in the future. The Committee asks the Government to provide this information in its next report.

The Committee notes in this context the promulgation of Legislative Decree No. 1086 introducing measures to promote the competitiveness of micro and small enterprises which enable the employees and heads of the enterprises to affiliate to the Social Pension System (SPS), which the State will subsidize in an amount equal to that paid in by the member (4 per cent of basic minimum remuneration). Under the SPS, (see section 14 of the abovementioned legislative decree), protected persons who have reached the age of 65 and who have made 300 effective contributions to the social pensions fund are entitled to retire. Section 11 provides that contributions to the SPS must be paid into an individual member’s account, to be administered by an AFP, an insurance company or a bank selected by tender. The Committee is bound to reiterate here the comments it made in point 1 of this observation concerning the basic principles of social security. Section 17 of the Legislative Decree No. 1086 allows members fulfilling the same requirements as those laid down in section 14 to apply for refund of the amounts accrued in their individual accounts plus any interest. The Committee points out that this provision is contrary to Article 30 of the Convention, since old-age benefits are to be provided throughout the contingency.

Furthermore, the CUT has informed the Committee that the SPS, established by the abovementioned decree, has not been positive for Peru’s pension system because membership is voluntary, so workers refrain from joining to avoid a reduction in their wages; that it is necessary to have reached the age of 65 and to have 25 years of contributions; that it allows applications for the refund of contributions plus any interest. The CUT also points out that the State’s contributions are not guaranteed since they depend on budgetary resources, and that at the time of writing, no such provision had been made in the budget. The Committee requests the Government to provide information on the implementation of the system established in Legislative Decree No. 1086 for the provision of old-age, invalidity and survivors’ pensions and on the resources allocated in the national budget to fund the contributions to the SPS. Bearing in mind that affiliation to the SPS will be voluntary for workers and heads of microenterprises, the Committee asks the Government to provide information on the measures adopted or envisaged to align the SPS with the provisions of Article 6 of the Convention laying down the principles to be observed by voluntary insurance schemes (supervision by the public authorities or joint administration by employers and workers, coverage of a substantial part of persons with low income, and compliance, in conjunction with other forms of protection, where appropriate, with the relevant provisions of the Convention.

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Peru is bound by the obligations under the Social Security (Minimum Standards) Convention, 1952 (No. 102), in respect of five of the nine branches of social security (medical care, sickness, old-age benefits, maternity and invalidity), as well as by a number of other social security Conventions (Nos 12, 19, 24, 25, 35 to 40 and 44). Given that the problems of application identified by the Committee in its many comments are essentially the same for all these Conventions, the Committee considers it appropriate to make a general comment for all social security Conventions ratified by Peru. For this purpose, the Committee had recourse to a 2009 ILO study on the social security system of Peru, and also to a 2009 International Monetary Fund (IMF) working paper on the effect of the financial crisis on pension insurance systems worldwide.

Non-compliance with the basic principles of the international
social security Conventions

For many years, the Committee has highlighted the fact that the different components of the social security system in Peru do not give effect to certain principles common to the social security Conventions ratified by the country, namely: (i) the collective financing of benefits; (ii) the democratic and transparent management of social security institutions; (iii) providing benefits throughout the contingency; and (iv) ensuring a minimum level of benefits.

The principle of collective financing of social security laid down by the ILO instruments provides that the cost of benefits and the cost of administering these benefits must be borne collectively by way of contributions and taxes (Article 71(1) of the Convention) and that the total of the insurance contributions borne by the employees protected shall not exceed 50 per cent of the total of the financial resources allocated to the protection of the employees (Article 71(2)). However, both in the private and in the public pension system of Peru, except in the case of voluntary contributions which the law allows employers to pay optionally, the insured are the only ones to contribute to individual capitalization accounts and to the financing of contributions for invalidity and survivors’ insurance. The contributions and administrative costs are also borne solely by workers affiliated to the administrators of private pension funds (AFP) and the Office of Standards for Welfare (ONP), which is contrary to the principle of joint financing of benefits established by the ILO Conventions. The Committee points out that by not respecting the principles of solidarity and collective financing, the individual capitalization accounts system is not compatible with Article 72(2) of Convention No. 102.

Convention No. 102 also requires that when the administration is not entrusted to an institution regulated by the public authorities or by a governmental department accountable to Parliament, representatives of persons protected shall participate in the administration or be associated and have advisory powers (Article 72(1)). This participation must be effective and allow the latter to influence the choices made in the investment and the management of the concerned bodies. In its latest reports, the Government agrees that the current national law does not enable affiliated members to participate in the management of the AFP. It nevertheless indicates that a discussion on this issue took place in Congress but that no conclusion was reached. The Government intends to examine the possibility of establishing a supervisory board, in which representatives of the insured would be able to participate and be empowered to collect information from the AFP on the administration of pension funds. With regard to health-care protection, while recognizing that the participation of insured persons in the administration of institutions of health providers (EPS) is not provided by law, the Government indicates that a public body – the Superintendencia de Entidades Prestadoras de Salud (SEPS) – supervises both the economic and financial activities, as well as the payment of benefits of the EPS.

The Committee notes the growing recognition by the Government of the need to strengthen the monitoring and surveillance activities as regards private social security entities. It requests the Government to provide in its next report information on the progress achieved with a view to supervising the activities of private operators by monitoring and surveillance bodies in which representatives of the insured participate. Along the same lines, given the low rate of affiliation to the social security system, the Committee requests the Government to ensure the participation of representatives of insured persons in the work of the national body responsible for collecting tax and social contributions – the Superintendencia de Administracion Nacional Tributaria (SUNAT) – and provide information in this regard.

Under the private system, old-age benefits are calculated on the basis of the capital that each insured person holds in his/her individual savings account (CIC). When the capital accumulated on this account is exhausted, entitlement to pension may disappear and the insured person who exceeds the average life expectancy could be without his/her only source of income. This is contrary to the principle of the international conventions according to which benefits must be provided throughout the contingency at the guaranteed minimum rate. It is therefore not possible to guarantee that the minimum rate set by the Convention is respected, because the level of pension paid under the private system cannot, for reasons inherent in this type of pension, be known until the time of retirement. The economic and financial crisis highlighted moreover the shortcomings of this system, as will be shown under item 3.

In addition, the Committee notes that in 2005 the Constitutional Tribunal of Peru recognized that the right to social security is a “fundamental right of legal configuration” which has an “essential core”, the violation of which by the legislature may be the subject of a constitutional complaint (Decision No. 1417‑2005 PATC of 8 July 2005). The Committee nevertheless notes that while Peru has been a party to Convention No. 102 since 1961 and that the Constitution recognizes that international treaties on human rights are part of the “block of constitutionality” (norms having constitutional value), the Constitutional Tribunal does not seem to include the principles and the minima guaranteed by Convention No. 102 into the “essential core” of the right to social security. This decision, thus, while upholding the right to social security as such, seems to devoid it of the concrete contents contained in Convention No. 102. In view of the international obligations undertaken by Peru, the Committee believes that recognition of the basic principles guaranteed by the social security Conventions of the ILO would effectively contribute to the implementation of the Peruvian rule of law based on the solidarity, participatory governance and social minima.

Malfunctioning of the public pension system

The Committee notes that the public pension system managed by the ONP seems to suffer serious shortcomings as a result of which numerous delays occur in the determination of the right to pension, causing in turn considerable judicial litigation. According to a report of July 2008 of the Defensoria del Pueblo del Perú, which is the independent public institution established by the Constitution in order to ensure respect for fundamental rights and the proper functioning of the rule of law, about 100,000 applications for determining entitlements to pension were awaiting a decision and an equally large number of cases challenging the decisions of the ONP were being considered by the courts. As per this report, the ONP is the institution against which the greatest numbers of complaints have been lodged by the Defensoria. This number is of significant importance considering that approximately 500,000 pensions are managed by the ONP and it has as many active contributors in the public pension system. The report of the Defensoria further notes that no up to date record of the contributions by members exists, that the burden of proof as regards the contributory period is not placed on the ONP, but on the insured and that procedures for granting pensions are excessively complex. The report indicates a series of recommendations to both the executive and legislative powers in order to correct the serious deficiencies mentioned above. Given these allegations, the Committee asks the Government to demonstrate in its next report how the Peruvian State assumes the full and general responsibility concerning the provision of benefits and the proper administration of social security institutions, in accordance with Articles 71 and 72 of the Convention.

Effects of the economic and financial crisis on the social
security system of Peru

The Committee notes that the Government has not responded to the 2008 general observation on the impact of the global economic and financial crisis on the social security system. It notes however that, according to 2009 statistics (IMF), the financial crisis has affected most severely the Peruvian private pension funds, which have lost an average of 32 per cent of their capitalization. The consequences are proving to be very significant, especially for insured people close to the age of retirement, because the value of the capitalization accounts has fallen sharply, driving down the level of pensions paid. The crisis has been more devastating in cases where financial investments of private pension schemes were not sufficiently regulated and where there was not a supplementary pay-as-you-go component based on the principle of solidarity providing defined benefits. The Committee considers that the Peruvian Government must be aware of the fragility inherent in the system of private management and should now consider the possibility of establishing financial mechanisms to protect funds accumulated for pension, such as insurances, funds to safeguard the amount of pensions, or the automatic transfer of individual accounts to funds where the investment risk is very low for insured persons near retirement.

The Committee notes that in order to overcome the deficiencies inherent in the private administration of the pension system, the Government established in March 2007 minimum pensions for those insured by private pension funds under certain conditions (Act No. 28991 on la libre desafiliación informada, pensión mínima y complementaria, y régimen especial de jubilación anticipada). Under this law, any person affiliated to the private pension system (SPP) who at the time of the creation of this system belonged to the public pension system (NPS), is entitled to a minimum benefit equal to that provided by the SNP or a supplementary pension if the pension from their private pension system is less than the minimum pension. The Committee notes, however, that the Act only guarantees a minimum pension for a limited number of insured persons who meet certain age requirements at the time of the introduction of the private pension system administered by the AFPs. The Committee considers that opening up the system of guaranteed minimum pensions to the entire population over a certain age would allow the Peruvian State to ensure a minimum old-age pension to all those whose level of pension risks being too low, in particular as a result of the current economic and financial crisis. The Committee invites the Government to further explore the advantages of extending the minimum pension to all residents with low incomes. The Government could, in this respect, wish to take advantage of the experiences of other countries in the region where a basic social pension of a non-contributory nature has been created, which benefits all citizens aged 65 and over who have never contributed or whose contributions are not sufficient for establishing the right to a pension.

The Committee also notes that in response to its previous comments regarding the need to reintroduce a reduced pension for all insured persons who have completed a period of at least 15 years of contribution or employment (Article 29(2) of Convention No. 102), the Government indicates that it has carried out the actuarial calculations necessary to calculate the cost of this measure to the pension system managed by the ONP. Currently, as a result of the retroactive effect of Decree-Law No. 19990, such a pension is, in fact, only paid to insured persons who have turned 60 before the entry into force of Decree-Law No. 25967, i.e. 19 December 1992 at the latest. The Government states that, given the size of the resources concerned (approximately 70 per cent increase in the national budget), it is for the Ministry of Economy and Finance to assess and decide on the implementation of this proposal. The Government is requested to draw the attention of the Ministry of Economy and Finance to Peru’s international obligation to restore the right to a reduced pension for insured persons who have completed at least 15 years of contribution or employment, in accordance with Article 29(2) of Convention No. 102, and to indicate in its next report the progress made on this matter. The Committee also invites the Government to avail itself of the technical assistance of the ILO, particularly as regards the actuarial evaluation of the impact of such a measure on the pension system.

Insufficient coverage and evasion of the obligation of
membership in the social security system

According to an ILO study, 2009, in 2007 only 35 per cent of the economically active employed population benefited from coverage for old age, invalidity and survivors, which demonstrates a significant level of evasion from the obligation to affiliate to the social security system in the formal economy. In 2006, among the approximately 2.2 million people over 65 years of age, only 500,000 were receiving old-age, invalidity or survivors’ benefits, representing a level of coverage of the elderly of approximately 23 per cent. As regards health-care protection, only 36 per cent of the total population was covered. Overall, these figures reveal the alarming situation of the evasion from the obligation of membership, particularly by large enterprises in the formal sector, and the need for the State to significantly strengthen the control exercised by the national body responsible for collecting tax and social contributions (SUNAT). By virtue of the international social security standards ratified by Peru, the Government has in fact the duty to ensure compliance with the requirement of compulsory affiliation to the social security system and is obliged to take concrete steps to improve coverage of the entire social security system. Article 5 of the Convention provides in this respect that States must ensure that the minimum percentage of membership in each branch of social security is actually achieved in practice. To achieve this result requires, among other things, providing the organs responsible for collecting contributions means to carry out their mission and providing for penalties that are sufficiently deterrent for offenders. In the case of Peru, the measures to control the application of the national legislation will be greatly facilitated by the fact that the urban labour force represents 65 per cent of the total workforce. The Committee trusts that the Government will set itself specific goals in terms of percentages of the population to which coverage will be extended within the assigned time frame, through the strengthening of its capacity to enforce the obligation of membership to the social security system, particularly as regards the urban workforce. Please provide detailed statistics on the extension of coverage of the country’s social security system for each branch of social security in both the public and private system.

Status of micro- and small enterprises

The Committee recalls that, at the time Peru ratified Convention No. 102 in 1961, it availed itself of the possibility for States whose economies and medical facilities are insufficiently developed, to apply the provisions only to 50 per cent of all employees in industrial workplaces employing 20 persons or more, instead of 50 per cent of all employees (Article 3 of the Convention). States that have used this derogation are required to indicate in their periodic reports the action taken to gradually expand the scope of persons covered and to specify whether the reasons for maintaining a reduced scope of application subsist, or whether they renounce to avail themselves of this exception in the future.

In 2008, with a view to providing coverage to most of the population working in small and medium-sized enterprises and to combating the significant level of evasion from membership and the payment of contributions by these companies, the Government adopted a Legislative Decree amending the legal regime for these companies as regards social security (DL No. 1086). The new Decree defines micro-enterprises as those employing not more than ten workers, and small enterprises as those employing up to 100 employees and a turnover below a certain amount. It establishes a special legal regime applicable to micro-enterprises where workers are not required to join a mandatory system of pension insurance and benefit from a special regime as regards health-care protection. Employers are required to make monthly contributions for each of their workers, supplemented by equivalent contributions paid by the State.

The Committee notes that, unlike health-care insurance which remains compulsory with certain adjustments, Legislative Decree No. 1086 renders the affiliation to the pension system voluntary. Given the large number of workers employed by these enterprises, it hopes that this measure only represents a transitional solution only applicable to newly created micro-enterprises for the maintenance of rights acquired under the previous regime. The Committee also draws the attention of the Government to the provisions of Article 6 of the Convention, which establishes the principles to be met by voluntary insurance schemes (control by public authorities or administered by joint operation of employers and workers, coverage of a substantial part of persons with low incomes, etc.). In light of these considerations, the Committee expects to receive information from the Government on the impact of the reform relating to the coverage of workers in micro-enterprises.

Introduction of a universal health-care insurance

The system of health-care protection in Peru is composed of the following schemes: Seguro Social de Salud (ESSALUD), Seguro Integral de Salud (providing significantly reduced benefits compared to the system ESSALUD and are financed by the Ministry of Health) and private insurances (EPS). Despite a considerable increase in the coverage of the contributory health-care social security system between 1999 and 2007, only about 36 per cent of the population benefited in 2007 from health-care coverage, and the remaining 64 per cent was not covered. In 2006, the percentage of employees covered was 32 per cent on average, with significant disparities between the public sector where the rate was 68 per cent and the private sector where the rate of coverage was 24 per cent. These rates determine Peru as one of the countries of the region where health-care coverage is generally the lowest and a country where regional inequalities within the country are most pronounced.

In recognition of this fact, the Government adopted in 2009 a framework law on universal health-care insurance (Law No. 29344 of 9 April 2009), the aim of which is to gradually extend to the entire population health-care benefits of a preventive, curative and rehabilitative nature on the basis of a basic plan for health-care insurance. This text is intended to give effect to the basic rights under the Peruvian Constitution, in particular the right to health-care protection, the universal and progressive right of everyone to social security which guarantees free access to health-care benefits provided by public, private and mixed entities, as well as the duty of the State to determine the national health policy. According to the framework law, the right to universal health-care insurance should be fully and progressively guaranteed to all residents at every stage of life, without any discrimination. The Ministry of Health is responsible for preparing the said basic plan and for creating a technical committee for the implementation of the universal health-care insurance. According to the latest information available in September 2009, the establishment of the universal health-care insurance had begun in some parts of the country, notably Apurímac, Huancavelica and Ayacucho.

The Committee notes that the introduction of a system of universal health-care insurance could, if implemented effectively, allow for the extension of health-care protection to an increasingly large part of the population. It notes however that in order to make the system of universal health-care insurance fully operational, the abovementioned law should be supplemented by technical regulations which ensure compliance with compulsory membership and contributions, especially for employees in the formal economy where evasion of the obligation to affiliate seems particularly high, progress can also be made in respect of employees in the informal economy, as independent workers, as well as the rural populations. The Committee will closely monitor the implementation of the system of universal health-care insurance and therefore requests the Government to provide information on the nature of care provided, as well as the progress made in terms of coverage of the population by economic sector and geographic region.

Developing a national strategy for sustainable development
of social security

In 2001, the International Labour Conference (ILC) reaffirmed the central role of social security and reiterated that it remained a challenge for all member States which had to be urgently addressed. The conclusions adopted by the ILC in 2001 recognize that “of highest priority are policies and initiatives which can bring social security to those who are not covered by existing systems”. To achieve this objective, the Conference urged each country to define a national strategy closely linked to other social policies. States parties, such as Peru,  to the International Covenant on Economic, Social and Cultural Rights (ICESCR), are required to develop a national strategy for the full implementation of the right to social security and should allocate adequate fiscal and other resources at the national level (General Comment No. 19 of the UN Committee on Economic, Social and Cultural Rights (CESCR), adopted in 2007). The Committee considers that the need for such a national strategy stems from the overall responsibility of the State to ensure the sustainability and proper functioning of the social security system, as established by Convention No. 102. The launch of a national strategy for the consolidation and development of a sustainable social security system would allow the State to fully exploit all of the potential offered by international social security standards to ensure the good administration of schemes and allow the gradual extension of coverage to the entire population. The Committee draws the attention of the Government to the possibility of making recourse to the technical assistance of the ILO in this regard.

[The Government is asked to reply in detail to the present comments in 2010.]

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With reference to its observation, the Committee notes the information provided by the Government. In particular, it notes the information provided by the Government in reply to its previous comments (Part XIII (Common provisions), Article 70). It wishes to draw the Government’s attention to the following points.

Article 10, paragraph 1, of the Convention. In reply to its previous comments, the Committee notes the copies of the contracts concluded with Health-Care Providers (EPS) to ensure the provision of medical care to insured persons, which were attached to the Government’s report. The Committee proposes to examine them at its next session.

Article 10, paragraph 2. With regard to the sharing by beneficiaries in the cost of medical care, the Government indicated in its previous report that it appeared to be unnecessary to provide for an exemption from the 10 per cent maximum share in the cost of outpatient and inpatient treatment envisaged in section 42(3) of Supreme Decree No. 009-97-SA, as the worker’s express consent is required for this maximum level to be exceeded. In its previous comments, the Committee requested the Government to indicate the measures adopted to ensure that the sharing by beneficiaries in the cost of medical care does not cause them hardship, in accordance with this provision of the Convention. In this respect, the Committee notes the resolution of the Superintendent No. 073-2000-SEPS/CD, provided by the Government with its report. The Committee proposes to examine the resolution at its next session.

Article 12. In reply to the Committee’s previous comments concerning the period during which medical care must be provided and the relevant provisions, the Government indicates that care is provided for as long as the medical condition of the insured person so requires, and provided that the latter has not failed to pay three monthly contributions, whether or not they are consecutive. In the event of invalidity, care is provided until the ONP takes over and provides a pension; care is provided by the Social Health Insurance Scheme (ESSALUD). The Committee notes this information. It once again requests the Government to indicate the legislative provisions applicable in this respect.

Part XIII (Common provisions) (in conjunction with Parts II, III and VIII), Article 69. In its previous comments, the Committee noted the information provided on certain instances of the suspension of cash benefits under the provisions of section 12 of Act No. 26790. It once again requests the Government to provide the texts of any other legal or regulatory provisions allowing the suspension of benefits in cash and in kind. Moreover, as the texts of resolution No. 248-GG-ESSALUD-2001 and Agreement No. 59-22-ESSALUD-99 of the Executive Board have not been provided, the Committee requests the Government to supply copies of them with its next report. Furthermore, it once again requests the Government to provide copies of the texts governing the conditions and procedures which must be adopted by the ESSALUD under section 15 of Supreme Decree No. 009-97-SA.

Article 70. With reference to its previous comments, the Committee notes the text of the resolution of the Superintendent No. 012-98-SEPS approving the Arbitration and Dispute Resolution Regulations of the Conciliation, Arbitration and Dispute Resolution Centre. The Committee proposes to examine the above text at its next session.

Part XIV (Miscellaneous provisions) (in conjunction with Parts II, III and VIII), Article 76. With reference to its previous comments, the Committee notes the statistical data provided by the Government on the numbers of persons protected by ESSALUD in relation to the economically active population (PEA) from 1990 to 2004. It once again requests the Government to provide information on the total number of employees and the number of employees protected as a percentage of the total number of employees.

The Committee once again requests the Government to provide the statistical data required under Article 76, paragraph 1(b)(ii), in conjunction with Article 65, regarding the amount of sickness and maternity cash benefits in the manner required by the report form under Article 65. Please also state whether a ceiling has been set for either sickness or maternity benefit, or for the wage taken into account for the calculation of these benefits.

Finally, the Committee notes that new workers, as indicated in section 53 of Supreme Decree No. 009-97-SA, may choose between ESSALUD and an EPS plan when they commence work and during the first year. In the view of the Government, this provision makes no type of discrimination in exercising this option, except for the requirement to be a worker.

Part IX (Invalidity benefit), Articles 56 and 57, paragraph 1 (in conjunction with Article 65). The Committee hopes that the Government will provide in its next report, as it indicated it would, precise statistical data showing whether the amount of invalidity benefit, whatever the type of pension chosen and the cost of the examination and procedures set out in section 117, attains the percentage established by the Convention (40 per cent) for a standard beneficiary (with a wife and two children) whose wages are equal to the wage of a skilled manual male employee.

Part XI (Standards to be complied with by periodical payments), Article 65, paragraph 10. The Committee hopes that the Government will provide with its next report all the statistical data requested by the report form under Article 65, Title VI.

Part XIII (Common provisions), Article 70. The Committee notes the information provided by the Government in reply to its previous comments.

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The Committee notes the information provided by the Government in its report and the discussion held in June 2005 in the Conference Committee on the Application of Standards. The Committee notes the information provided by the Government in its report and the attached documents.

Health-care scheme

Part II (Medical care), Article 10 of the Convention (in conjunction with Article 8). In its previous comments, the Committee requested the Government to indicate, especially through statistics, the situation with regard to domiciliary visiting for persons affiliated to Health Care Providers (EPS). In its report, the Government indicates that the Health Care Providers Supervisory Authority does not have statistical data on health plans which include the additional benefit of doctors’ visits at home. A rapid survey was therefore undertaken reviewing 50 plans out of a total of 1,354 regular contracted health plans in the EPS system and it was found that 6 per cent of the plans do not include this benefit, but that in all cases these are old plans which have been in force for over three years and are valid up to the month of September 2005. As from September 2005, all plans include domiciliary visiting by doctors. The Committee notes this information, as well as the statistics on the number of persons covered by compulsory and voluntary insurance who received care at home in 2004. It hopes that, as indicated by the Government, in future all persons affiliated to EPS will, in accordance with this provision of the Convention, benefit from domiciliary visiting for the provision of health care. It requests the Government to keep it informed of the progress achieved in this respect, and to provide statistical information illustrating the situation in this regard.

Part II (Medical care), Article 9, Part III (Sickness benefit), Article 15, and Part VIII (Maternity benefit), Article 48. In its previous comments, the Committee noted the information and statistics provided by the Government concerning the care and benefits provided by ESSALUD in the departments of Amazonas, Apurímac, Huancavelica, Huánuco, Madre de Dios, Moquegua and Pasco. It also noted the Government’s indication that the EPS system had not received applications for membership in the above areas in view of the low number of workers in the formal economy in these regions.

The Committee requested the Government to keep it informed of any measures adopted or envisaged to supplement existing health establishments in departments such as Huancavelica, Madre de Dios and Moquegua where, by comparison with the other departments mentioned above, there are relatively few such establishments in relation to the number of persons insured by ESSALUD. In its reply, the Government indicates that 84 per cent of those affiliated with EPS in the above areas have received care in the enterprises and institutions attached to the EPS system, with care being provided on average on 4.69 occasions in 2004, and that in December 2004 a clinic was registered in the department of Huanuco. Furthermore, according to the available data, health-care establishments exist in the departments of Madre de Dios, Huancavelica and Moquegua. Patients receive care when this is required by their clinical condition. The Committee notes this information with interest, as well as the detailed information on the insured population contained in the report prepared by ESSALUD in 2005. It requests the Government to provide information on the health-care establishments set up in the departments referred to above, with an indication of the type of care provided, and on the progress achieved in extending coverage to the departments of Amazonas, Apurímac, Huánuco and Pasco. It also requests the Government to provide detailed information on the geographical coverage and the numbers of persons covered by the three health programmes (ESSALUD, MINSA and SIS), in the manner requested in the report form (see the direct request).

Part XIII (Common provisions) (in conjunction with Parts II, III and VIII), Article 71. With reference to its previous comments concerning the manner in which the Health Care Providers Supervisory Authority (SEPS) supervises the operation of the health-care system, the Committee notes the supervisory reports of the Novasalud EPS and the Rimac Internacional EPS, a feasibility study requested previously and decisions applying penalties under resolution No. 26‑2000‑SEPS/CD.

Article 72. In its previous comments, the Committee requested the Government to indicate the measures it intended to take to allow the participation of the persons protected in the administration of EPS and the health-care services of individual enterprises. In its report, the Government indicates that the fact of establishing by regulation the participation of insured persons in the administration of autonomous institutions could be a breach of the constitutional right of free enterprise and the property held by private enterprises, as is the case of EPS. However, it indicates that the Health Care Providers Supervisory Authority operates a system of supervising benefits and economic and financial conditions intended to monitor solvency and the quality of the services provided in relation to the rights of insured persons. On the other hand, provisions have been established covering the process of the selection of the EPS and of health plans by insured persons. Regulations have also been issued respecting appeals and complaints, establishing the procedures to be followed by EPS users in the event of shortcomings in the service provided and failure to comply with any of the clauses of the contract. It adds that Convention No. 102 is based on the premise that public services are provided by the State. From this viewpoint, the participation of insured persons in administration is logical; nevertheless, under systems based on the participation of the private sector in the provision of public services, the role of the State is no longer the provision of benefits, but is focused on regulation and supervision; accordingly, Convention No. 102 could be interpreted in such cases as meaning that insured persons should participate in public regulatory bodies. The Committee notes the Government’s statement.

The Committee wishes to remind the Government that Convention No. 102 is formulated in very flexible terms and is not based on the supposition that the provision of public services will be carried out solely by the State. The Convention authorizes the use of very varied methods to guarantee the benefits envisaged so as to take into account the diversity of situations at the national level. Under the terms of Article 72 of the Convention, the administration may be entrusted to an institution regulated by the public authorities or to a government department or any other institution, provided that certain rules are respected. Convention No. 102 does not impose a uniform system of organization, but whatever the type of organization selected, the various interests that have to be represented in the administration of social security systems have to be taken into account, and particularly those of the persons protected. The Committee does not consider that the fact of establishing by regulation the requirement for the participation of insured persons in the administration of autonomous institutions could be in violation of the constitutional right to free enterprise and the property held by private enterprises which is enjoyed by private enterprises such as the EPS. What is important in this respect is that the interests of insured persons are represented in the administration of EPS. This is all the more important as, under the terms of the legislation (sections 15 and 16 of Act No. 26790), enterprises which provide health benefits, through EPS or their own services, are entitled to a credit on workers’ contributions which, in theory, is equivalent to 25 per cent of these contributions. The Committee shares the Government’s opinion that the procedures of accreditation and supervision can serve as a guarantee that the rights of insured persons are respected. However, it recalls that the participation envisaged in this provision of the Convention is intended to ensure that insured persons participate in the administration of these institutions and services. The Committee therefore trusts that the Government will re-examine the issue of the participation of insured persons in the management of autonomous institutions and that it will soon provide information on the measures adopted or envisaged to bring the national legislation into conformity with this provision of the Convention.

Pensions scheme

        I.     Private pensions system

Part V (Old-age benefit), Articles 28 and 29, paragraph 1 (in conjunction with Article 65 or Article 66). In reply to the Committee’s previous comments, the Government reiterates that the rates of the pensions provided under the Private Pensions System (SPP) cannot be determined in advance as they depend on the capital accumulated in individual capitalization accounts, and in particular on the return on the investments and the certificate testifying to other contributions paid, where appropriate. The Government provides information on the number of retirement pensions and their average amount in soles, as provided by the SPP as of 30 September 2004. Furthermore, based on certain assumptions, the Government makes an estimate to calculate the amount of a pension for an insured person who has contributed for 30 years. The Committee notes this information. As it is not possible under the Private Pensions System to know in advance the amount of benefits, the Government has to demonstrate that the minimum old-age pension under the National Pensions System (SNP) attains the minimum rate of benefit required by the Convention. This is all the more necessary as the minimum pension is a guarantee offered by the State to insured persons whose capital and accumulated return in their individual accounts are insufficient to attain the minimum rate required by the Convention, and to insured persons who have selected programmed retirement but have exhausted the resources accumulated in their individual account. In this respect, the Committee once again recalls that the Government may have recourse to Article 66 of the Convention within the framework of the Private Pensions System provided that the minimum old-age benefit payable to a standard beneficiary with 30 years of contribution is not less than the minimum rate required by the Convention
(40 per cent of the wage of an ordinary adult unskilled male labourer as defined in paragraphs 4 and 5 of the above Article).

Article 30. In its previous comments, the Committee requested the Government to indicate whether the minimum pension is also granted to insured persons who have reached 65 years of age with 20 years of contributions and who have opted for programmed retirement, and who have exhausted the capital accumulated in their individual accounts through the monthly withdrawals permitted by the system until the capital in their accounts is exhausted. The Government indicates that the approved minimum pension scheme is a supplementary scheme and does not replace state action. The minimum pension represents a guarantee offered by the State to workers who, while fulfilling the requirements in relation to age and contributions, do not benefit from a pension that is equal to or greater than the minimum pension established by the National Pensions System. It adds that those workers who have received a retirement pension under the programmed retirement procedure and whose account is exhausted cannot subsequently receive the minimum pension. The Committee notes this information with concern. It hopes that the Government will adopt the necessary measures to ensure, in conformity with this provision of the Convention, the payment of old-age benefit throughout the contingency,

Part IX (Invalidity benefit), Article 58. In its previous comments, the Committee noted that a worker with invalidity and survivors’ coverage is entitled to invalidity benefit for life payable by the insurance company. It also noted that when an insured person is not covered by invalidity insurance in the context of the Private Pensions System, that person receives a pension deducted from her or his individual capitalization account and may, in this context, receive a pension based on a life annuity. As, under the terms of section 44 of Supreme Decree No. 054‑97‑EF issuing the single text of the Act on the Private Pension Fund Administration System and section 131 of Supreme Decree No. 004-98-EF, a worker suffering from permanent or partial invalidity may choose between four forms of benefit, which include programmed retirement, the Committee requested the Government to indicate the measures adopted or envisaged to ensure that full effect is given to this provision of the Convention, under the terms of which the benefit shall be granted throughout the contingency. In its report, the Government indicates that when a worker is covered by invalidity and survivors’ insurance, the invalidity pension is at the charge of the insurance company and is provided for life. In the case of insured persons who are not covered by the SPP invalidity and survivors’ insurance, they are provided with a pension based on the resources in their individual capitalization accounts and other certified contributions, and receive a pension under the programmed retirement system; if the insured person is entitled to a certificate attesting to the payment of other contributions that is in the process of being issued, a preliminary pension will be provided under the programmed retirement system based on the existing balance of the individual capitalization account until reaching the statutory pensionable age. In this latter case, when the insured person reaches the statutory pensionable age, the certified contributions will be redeemed and the individual capitalization account will be closed, with the insured person receiving the redemption value of the certified contributions and whatever remains in the individual account. An insured person may opt for the programmed retirement method and then subsequently for a life annuity, which serves to ensure the provision of a minimum pension for persons affiliated to the SPP who are receiving a pension below the minimum rate or who were receiving a pension but whose individual account is exhausted. The Committee notes the above information. It requests the Government to indicate the provisions of the legislation under which this latter situation is envisaged.

Part XIII (Common provisions), Article 71, paragraph 1. In its previous comments, the Committee noted that the cost of the benefits, certain administrative expenses and the costs of certain commissions are at the exclusive charge of workers who are insured under a Private Pension Fund Administrator (AFP), and that employers’ contributions are of a voluntary nature. The Committee consequently hoped that the Government would take the necessary measures to ensure that full effect is given to this provision of the Convention. In its reply, the Government indicates that the SPP is an individual capital accumulation scheme, in which the amount of the pension is directly related to the quantity and value of the contributions made to the individual capitalization accounts of insured persons. Furthermore, the administration of the capital contained in individual accounts is the responsibility of the AFP, which receives payment for the services provided, which include a series of processes within the registration-collection-accreditation-investment-pension continuum throughout the working life of each insured person.

The Government provides information in this respect on the introduction of mechanisms to reduce the level of commissions, which have to correspond to a plan for permanent affiliation to the AFP. Moreover, if workers affiliated to the SPP interrupt the payment of their contributions, the process of investing the capital in their respective capitalization accounts is not affected and the accounts continue to generate returns. In this context, the administrators make no charge for the continued service of administering the funds. Finally, with regard to the collective financing of benefits, the SPP includes a minimum pension which allows the State to subsidize an adequate pension for those insured persons who fulfil the requirements of age and contributions set out in Act No. 27617 and who have not accumulated sufficient resources to finance the pension individually. The minimum pension is financed directly from the resources of the Public Treasury. The Committee notes this information. It regrets to note once again that, contrary to the provisions of Article 71, paragraph 1, of the Convention, both the financing and the costs of administering the private pensions scheme are at the exclusive charge of insured persons. The Committee does not believe that the minimum pension provided by the State solely in specific cases may be considered to represent collective participation within the meaning of Article 71, paragraph 1, of the Convention. On the contrary, the private pension scheme in Peru is an independent contributory scheme in which the resources destined to be used for the provision of benefits are obtained through the contributions made by insured persons. Under these conditions, the Committee hopes that the Government will take the necessary measures to give effect to this provision of the Convention, under the terms of which “the cost of the benefits (…) and the cost of the administration of such benefits shall be borne collectively by way of insurance contributions or taxation or both in a manner which avoids hardship to persons of small means and takes into account the economic situation of the member and of the classes of persons protected”.

Article 71, paragraph 2. The Committee once again points out that, under the terms of this provision of the Convention, the total of the insurance contributions borne by the employees protected shall not exceed 50 per cent of the total of the financial resources allocated to the protection of employees and their spouses and children. In its report, the Government indicates that a person insured with the SPP currently has to pay contributions to her or his individual account at a rate of 8 per cent of monthly remuneration. Compulsory contributions make it possible to accumulate capital gradually to finance the retirement pension, as SPP pensions are directly related to the contributions paid individually by workers during their working lives and the return obtained by the AFP through the investment of such resources on the capital market. In this respect, it notes that the retirement pension of an insured person who has made 30 years of contributions will be financed to the level of 44.2 per cent by compulsory contributions and by the returns from the investments of the pension fund. The Committee trusts that the Government will provide in its next report the statistics required by the report form under this Article of the Convention, both with regard to private pensions and health schemes and public schemes. The Committee requests the Government to indicate the total average percentage, including the average applied to individual capitalization accounts and the average applied to wages, of the commissions on the average wage of a worker.

        II.   System of pensions administered by the
              Insurance Standardization Office (ONP)

Part V (Old-age benefit), Article 29, paragraph 2. In its previous comments, the Committee noted that this provision of the Convention is applicable to all old-age benefit schemes which establish a minimum period of contribution or employment, whether 20, 25 or 30 years, and provides for entitlement to a reduced pension for workers completing a qualifying period of 15 years of contribution or employment. Under these conditions, the Committee expressed the hope that the Government would take the necessary measures in the near future to ensure that protected persons may benefit, in accordance with this provision of the Convention, from a reduced pension after 15 years of contribution, and not 20 years as envisaged in Act No. 25967.

The Government indicates that the provision of a reduced pension for insured persons who have completed 15 years of contribution is envisaged under Legislative Decree No. 19990 in the case of insured persons who on 18 December 1992 had reached 60 years of age and completed the number of contributions specified. Nevertheless, in the context of the Convention, the ONP has been making proposals with a view to quantifying the cost in terms of both its impact on the budget of the National Pension System and its actuarial cost. The report with the final results of this analysis will be submitted to the Ministry of the Economy and Finance, which will assess the proposal and its feasibility in relation to the resources available for that purpose. The Committee notes this information. It hopes that the evaluations that the Government is carrying out will result in the introduction, in accordance with this provision of the Convention, of a reduced pension applicable to the various pension schemes for insured persons who have completed 15 years of contribution. It once again requests the Government to provide additional information on the effect given in practice to Act No. 27655 and Supreme Decree No. 028-2002-EF, which envisage the granting of minimum guaranteed pensions in the context of the National Pensions System for persons who have not completed the minimum requirement of 20 years of contribution to the scheme.

Part XI (Standards to be complied with by periodical payments), Articles 65 and 66. The Committee notes with interest the measures adopted and the progress achieved in increasing the level of the pensions provided by the National Pensions System. It notes the information supplied on the progression of the average pension in relation to the general consumer price index in Lima for the period 1996-2005. Taking into account the importance of this issue, the Committee requests the Government to keep it informed of the application of measures to adjust the rates of periodical payments so as to take into account in particular changes in the cost of living in the country, in accordance with Articles 65, paragraph 10, and 66, paragraph 8.

        III.  Supervision of the private and public pension systems

In its previous comments, the Committee pointed out the need for actuarial studies and calculations to be carried out regularly in order to ensure the application of Articles 71, paragraph 3, and 72, paragraph 2, in both the private and the public pensions systems. It notes the technical report undertaken to serve as a basis for a legislative proposal relating to the maintenance of compulsory contribution rates to pension funds.

Furthermore, in its previous comments, the Committee noted that the minimum rate of return of AFPs is determined in relation to the average profitability obtained by all private pension funds and does not necessarily guarantee a real return above the rate of inflation that is capable of providing effective protection for insured persons. It therefore requested the Government to indicate whether any measures had been taken, including prudential arrangements, with a view to preserving the rights of insured persons where the return on investments is negative. In its report, the Government indicates that AFPs have to administer the resources of pension funds with the objective of achieving the maximum return for the least possible risk, with a view to providing retirement, invalidity and survivors’ benefits and funeral grants. The investments have to generate a minimum return, so as to ensure the worker a minimum return, despite any possible bad management of investments by the AFP and/or adverse events or situations on the Peruvian capital market, whether internal or external in their origins. In this respect, the Government indicates that, with the adoption of Act No. 27988 and Supreme Decree No. 182-2003-EF, changes were made in the calculation of the minimum level of profitability. Furthermore, Resolution SBS No. 275-2005 established the responsibility of AFPs to select reference profitability indicators for each of the categories of investment of capital in relation to compulsory and voluntary contribution funds. The Committee notes this information. It requests the Government to provide updated copies with its next report of studies on the financial balance of public and private institutions, with an indication of the results of the studies and calculations.

        IV.  Participation of protected persons in the administration
              of the systems

In its previous comments, the Committee noted with interest that, following the adoption of Act No. 27617 of 1 January 2002 reorganizing the public and private pensions systems, the Consolidated Reserve Fund (FCR) is now administered by a Board, the officers of which include two representatives of retired persons appointed at the proposal of the National Labour Council.

With regard to the Private Pensions System, the Committee requested the Government to provide information on the measures adopted or envisaged to give effect, in the context of the Private Pensions System to Article 72, paragraph 1, which provides that where the administration is not entrusted to an institution regulated by the public authorities or to a government department responsible to the legislature, representatives of the persons protected shall participate in the management, or be associated therewith in a consultative capacity, under prescribed conditions. In its report, the Government indicates that AFPs are the only entities authorized to administer the resources of pension funds. If dissolution or liquidation proceedings are initiated for an AFP, once they have been resolved, its administration and representation is assumed by special delegates appointed by the superintendent, and who must constitute an odd number of at least three members. The functions of the special delegates are to be established by special regulation. Once the inventories and financial accounts of the AFP and its funds have been formulated by the special delegates, they are then temporarily administered by one or more other AFPs designated by the superintendent. The Committee notes this information. Since, as it indicated in previous comments, the freedom to choose an AFP is not sufficient to comply with the requirement of the participation of the insured persons in the administration of insurance institutions, as required by this provision of the Convention, it hopes that, as it announced previously, the Government will take the necessary measures to secure greater participation by insured persons or their representatives in the administration of AFPs.

        V.   Communications from representative organizations relating
              to the application of the Convention

The Committee notes with interest the detailed information provided by the Government in reply to the communication, received by the Office on 10 April 2003, from the Association of Former Employees of the Peruvian Social Security Institute alleging non-compliance with a decision of 12 January 2001 issued by the Constitutional Court, ordering the adjustment of the pensions granted under Legislative Decree No. 20530. The Committee notes in this respect that the levelling or adjustment was undertaken taking into consideration the list of dismissals of the month of January 1997, and that these measures covered all dismissed workers covered by Legislative Decree No. 20530.

With reference to the observations made by the Association of Retired Oil Industry Workers of the metropolitan area of Lima and Callao, the Committee notes the Government’s indication that communication No. 362-2005-MTPE/OAJ was sent to the High Court of Justice of Lima, and that the outcome is awaited. The Committee requests the Government to keep it informed in this respect.

With regard to the communication submitted previously by the World Federation of Trade Unions (WFTU), relating to the allegations made by the National Central Association of Retired Workers and Pensioners of Peru (CENAJUPE) concerning the adjustment of pensions, the Committee notes that the Government undertakes to provide information in this respect in a future communication.

The Committee is also raising other matters in the context of a request addressed directly to the Government.

[The Government is asked to reply in detail to the present comments in 2007.]

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The Committee refers the Government to its observation and takes note of the information in the Government’s report, particularly that pertaining to Article 7 of the Convention (practical implementation of the medical care system). It wishes to draw the Government’s attention to the following points.

Article 10, paragraph 1, of the Convention. In response to the Government’s request for samples of the contracts concluded with the Health Care Providers (EPS) to cover affiliates’ medical care, the Government states that it appended copies of such contracts to its report. Since the report contained no such enclosures, the Committee requests the Government to send them with its next report.

Article 10, paragraph 2. With regard to beneficiaries’ share in the cost of medical care, the Government indicates that it seems to be unnecessary to provide for an exemption from the 10 per cent maximum share in the cost of outpatient and inpatient treatment established in section 42(3) of Supreme Decree No. 009-97-SA, because the worker’s express consent is required in order for the maximum to be exceeded. The Government’s report refers in this connection to Resolution No. 073-2000-SEPS/CD of the Supervisory Authority. Since the abovementioned resolution was not provided, the Government is asked to send a copy of it with its next report. Please also indicate the measures taken to ensure that beneficiaries’ share in the cost of medical care does not cause them hardship, in accordance with this provision of the Convention.

Article 12. The Government states that it will send the information on the period during which medical care must be provided and on the relevant provisions as soon as these become available. The Committee notes this statement and trusts that the Government will take the necessary steps to collect and send this information as soon as possible.

Part XIII (Common provisions) (in conjunction with Parts II, III and VIII), Article 69. With reference to its previous comments, the Committee notes the information on instances of the suspension of cash benefits allowed by section 12 of Act No. 26790. It requests the Government to provide the texts of any other legal or regulatory provisions allowing for the suspension of benefits in cash and in kind. Since Resolution No. 248-GG-ESSALUD-2001 and Agreement No. 59-22-ESSALUD-99 of the Management Board, referred to in the report, have not been sent, the Committee requests the Government to include them with its next report. It again requests the Government to provide copies of the texts governing the conditions and procedures which must be adopted by the IPSS under section 15 of Supreme Decree No. 009-97-SA.

Article 70. The Committee takes note of the provisions of the Arbitration Act, No. 26572 of 3 January 1996, allowing arbitration awards to be challenged in the courts of law. With regard to dispute settlement, it notes that health-care beneficiaries may apply, through ESSALUD, either to the Insurance Ombudsman, an independent body responsible for enforcing the rights of beneficiaries, or to the ordinary courts or for arbitration. Noting that the Government refers in its report to a publication by the Conciliation and Arbitration Centre of the EPS Supervisory Authority containing various instruments governing this matter, the Committee would be grateful if the Government would provide a copy of this document with its next report.

Part XIV (Miscellaneous provisions) (in conjunction with Parts II, III and VIII), Article 76. With reference to its previous comments, the Committee notes the statistical information sent by the Government on the number of employees protected by the health insurance under the general scheme and under special schemes. As to the other information requested - the total number of employees and the number of employees protected as a percentage of the total number of employees - the Committee hopes that the Government will provide these data shortly in order to give an accurate picture of the manner in which the Convention is applied in the country.

The Committee notes in this connection that in 2002, insured persons with health insurance coverage (ESSALUD) amounted to 18.3 per cent of the economically active population nationwide. The Committee observes that since 1994, in absolute terms there has been no change in the number of ensured persons, and that this, combined with the increase in the economically active population since that date, has caused a significant decline in persons insured under ESSALUD expressed as a percentage of the economically active population. In these circumstances, the Committee hopes that the Government will shortly provide all the information requested so that the Committee is in a position to assess application of the Convention in the country.

Since the Government’s report provides no information in reply to several other matters raised previously, the Committee requests the Government to answer these points in its next report. It again requests the Government to provide the statistical information required under Article 76, paragraph 1(b)(ii), in conjunction with Article 65, regarding the amount of sickness and maternity cash benefits, in the manner required by the report form under Article 65. Please also state whether a ceiling has been set for either sickness or maternity benefit, or for the wage taken into account for the calculation of these benefits.

Lastly, the Committee hopes that the Government will indicate whether section 52(2) of Supreme Decree No. 009-97-SA, under which workers may once a year decide individually to switch from ESSALUD to an EPS, and vice versa, also applies to the new workers referred to in section 53 of the same text.

Part IX (Invalidity benefit), Articles 56 and 57, paragraph 1 (in conjunction with Article 65). (a) The Committee notes that the Government’s report does not reply to its previous comments. It accordingly asks the Government once again to indicate in its next report, on the basis of detailed statistics, whether the amount of invalidity benefit, whatever the type of pension chosen and the cost of the examination and procedures set out in section 117, attains the percentage established by the Convention (40 per cent) for a standard beneficiary (with a wife and two children) whose wages are equal to the wage of a skilled manual male employee.

(b) Please also specify the level of the benefit provided to an invalid who, after becoming an invalid, reaches the age of entitlement to a pension established under section 39 of Legislative Decree No. 25897 of 27 November 1992 (see section 115 of abovementioned Supreme Decree No. 206-92-EF).

Part XI (Standards to be complied with by periodical payments), Article 65, paragraph 10. Since the Government refers to statistical information not enclosed in the report, the Committee hopes that the Government will provide all the statistical information requested by the report form under Article 65, Title IX, with its next report.

Part XIII (Common provisions), Article 70. The Committee notes with interest the provisions of sections 208 and 209 of Act No. 27444 on the general administrative procedure for complaints and appeals. It notes that according to section 1 of the abovementioned Act, the Act applies to bodies of the public administration and to private legal entities engaged in public service activities. The Committee understands that Act No. 27444 applies to bodies coming under private health and pension systems, and requests the Government to confirm whether this is the case.

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The Committee takes notes of the information supplied by the Government in its report and of the documents appended thereto. It notes with interest that technical assistance was supplied by the ILO to the competent Peruvian authorities with a view to improving application of the Convention.

Health-care scheme

Part II (Medical care), Article 10 of the Convention (in conjunction with Article 8). In response to the Committee’s previous comments and request for information on the provision of medical care, including home visits, without any age requirement, the Government indicates in its report that there are several channels through which the Health Care Social Security System (ESSALUD) provides domiciliary care and visiting, including the Domiciliary Care Programme (PADOMI), open to persons over 70 years of age and persons of under 70 with physical difficulties. Apart from PADOMI, the Government refers to primary and secondary health-care centres, which also offer domiciliary visiting for medical follow-up of patients, regardless of age, as part of the measures for families of at-risk users or for treatment follow-up, and to domiciliary care visits carried out by the services of third-category large hospitals. The Committee notes with interest this information and the related statistical information supplied by the Government. Since the Government’s report provides information on the ESSALUD system, the Committee would be grateful for information, including statistics, showing the situation with regard to domiciliary visiting for persons affiliated to Health Care Providers (EPS).

Part II (Medical care), Article 9, Part III (Sickness benefit), Article 15 and Part VIII (Maternity benefit), Article 48. With reference to its previous comments, the Committee notes the information and the statistics supplied by the Government concerning the care and benefits provided by ESSALUD in the departments of Amazonas, Huancavélica, Huanuco, Madre de Dios, Moquegua and Pasco. It notes in particular that, according to the Government, the EPS system has received no applications for membership in the abovementioned departments because there are few workers in the formal economy in these regions, and requests the Government to keep it informed of any developments in this respect.

The Committee also notes the information on the number of employees protected by ESSALUD in the abovementioned departments and the distribution, according to type, of ESSALUD heath-care establishments in these departments. It requests the Government to keep it informed of any measures taken or envisaged to supplement existing health establishments in departments such as Huancavélica, Madre de Dios and Moquegua, where, by comparison with the other departments mentioned above, there are relatively fewer such establishments in relation to the number of persons ensured by ESSALUD.

Part XIII (Common provisions) (in conjunction with Parts II, III and VIII), Article 71. In reply to the Committee’s previous comments on the manner in which the Health Care Providers Supervisory Authority (SEPS) supervises the operation of the health-care system, the Government states that it appends to its report copies of reports on the supervision of Novasalud EPS and Rimac Internacional EPS, the feasibility studies requested previously and decisions issuing penalties under resolution No. 026-2000-SEPS/CD. The Committee notes, however, that these documents are not appended to the report and requests the Government to send them with its next report.

Article 72. In its previous comments, the Committee requested the Government to indicate the measures it intended to take to allow the participation of the persons protected in the administration of EPS and the health-care services of individual enterprises. In its report, the Government indicates that, although the legislation does not provide for such participation, there are supervision and control mechanisms in the two areas referred to by the Committee. It again indicates that the regulation and supervision of EPS is the responsibility of the SEPS, a public body created for this purpose. It adds, with regard to the health-care services of individual enterprises, that the latter must have the approval of the Ministry of Health and must submit their health plans to ESSALUD in order to be allowed to carry out their activities. The Committee takes note of this information. It shares the Government’s view that such approval and supervision procedures do provide some guarantee for the rights of insured persons. However, it points out that the purpose of the participation provided for in this provision of the Convention is to associate the insured persons with the management of these institutions and services. This is the more necessary in the case of EPS because according to the legislation (sections 15 and 16 of Act No. 26790), enterprises which provide health care, through EPS or their own care services, are entitled to a credit drawn from workers’ contributions equal, in principle, to 25 per cent of the latter. The Committee therefore hopes that the Government will re-examine the matter of participation by insured persons in the management of independent insurance institutions and that it will very shortly report on measures taken or envisaged to bring the legislation into line with this provision of the Convention.

Pensions scheme

I. Private pensions system

Part V (Old-age benefit), Articles 28 and 29, paragraph 1 (in conjunction with Article 65 or Article 66). In answer to the Committee’s previous comments requesting information on the rates of pensions in the private system, together with the statistics on this subject requested in the report form, the Government again indicates that the rates of the pensions provided under the private pensions system (SPP) cannot be determined in advance since they depend on the capital accumulated in individual capitalization accounts, and in particular on the earnings of these accounts. With regard to the minimum of 40 per cent of the reference wage applying to old-age benefit, the Government indicates that the SPP having existed for only ten years, it is only possible to estimate or project on the basis of the average earnings obtained since the SPP was set up, which gives higher percentages than the 40 per cent established by the Convention. The Government furthermore provides statistical data indicating that 7,730 people received old-age benefit under the SPP, the average pension being 840 new soles.

While noting the abovementioned information and statistics, the Committee considers that they do not allow it to determine whether full effect is given to the Convention. It must therefore reiterate its request to the Government to provide all the statistics required by the report form so that it can fully assess the extent to which old-age benefit attains, in all instances and regardless of the type of system selected, the level prescribed by the Convention.

With reference to its previous comments, Committee notes the information supplied by the Government to the effect that pursuant to Act No. 27617 of 1 January 2002 the amount of the minimum pension under the SPP is 415 new soles. It notes in particular that this pension may be granted to persons born before 31 December 1945 who, on reaching the age of 65 years, have been affiliated for at least 20 years to the SNP or the SPP and whose contributions amount to not less than the statutory minimum wage. The Committee reminds the Government that Article 66 of the Convention may be applied within the framework of a private pensions system provided that the minimum old-age benefits payable to a standard beneficiary with 30 years of contribution are not less than the minimum required by the Convention (40 per cent of the wage of an ordinary adult unskilled male labourer as defined in paragraphs 4 and 5 of the abovementioned Article).

Article 30. With reference to its previous comments, the Committee notes that according to the Government, programmed retirement is based on life expectancy, reassessed yearly, and may be revoked where the insured person is able to switch to another retirement regime. The Government again refers to the abovementioned minimum pension, financed from public funds, which may be paid to persons fulfilling the applicable age and contribution requirements. The Committee takes note of this information. It requests the Government to indicate whether this minimum pension is also granted to insured persons of 65 years of age with 20 years of contribution who have opted for programmed retirement and who have exhausted the capital accumulated in their individual accounts. If so, please indicate the relevant legal provisions. The Committee once again points out that under Article 29, paragraph 1, read in conjunction with Articles 28 and 65 or 66, an old-age benefit at least equal to 40 per cent of the reference wage must be secured to a protected person who has completed, prior to the contingency, in accordance with prescribed rules, a qualifying period which may be 30 years of contribution.

Part IX (Invalidity benefit), Article 58. With reference to its previous comments, the Committee notes the Government’s statement that a worker with invalidity and survivors’ coverage is entitled to invalidity benefit for life payable by the insurance company. The Government adds that insured persons who are not covered for invalidity under the private pensions system receive a pension drawn from their capitalization accounts and may, under this regime, receive a pension in the form of a life annuity payable until their death. While noting this information, the Committee points out that by virtue of section 44 of Supreme Decree No. 054-97-EF issuing the single text of the law on the private pension fund administration system, and of section 131 of Supreme Decree No. 004-98-EF, a worker suffering from permanent or partial invalidity may choose between four forms of benefit, which include programmed retirement. Since, under the programmed retirement system insured persons may make monthly withdrawals until they have exhausted the capital in their individual accounts, which is contrary to the principle that the benefit must be paid throughout the contingency, the Committee again requests the Government to indicate the measures taken or envisaged to ensure that full effect is given to this provision of the Convention in the event of total permanent invalidity of a worker who has opted for programmed retirement.

Part XIII (Common provisions), Article 71, paragraph 1. In response to the Committee’s previous comments, the Government reiterates that workers’ contributions are fixed on the basis of their earnings, which allows differentiated distribution of the costs of fund administration by private pension fund administrators (AFP). The Government adds that there was a reduction of such costs in 2002 and that it hopes that this trend will continue. The Committee notes this information but observes that the Government’s report provides no response to its previous observation that the cost of the benefits, certain administrative expenses and the cost of certain commissions are at the exclusive charge of workers who are insured under an AFP, with employers’ contributions being of a voluntary nature. Consequently, the Committee must again point out that by virtue of Article 71, paragraph 1, "the cost of the benefits … and the cost of the administration of such benefits shall be borne collectively by way of insurance contributions or taxation or both in a manner which avoids hardship to persons of small means and takes into account the economic situation of the Member and of the classes of persons protected". The Committee hopes that the Government will take all necessary steps to ensure that full effect is given to the Convention on this point.

Article 71, paragraph 2. The Committee once again points out that according to this provision of the Convention, the total of the insurance contributions borne by the employees protected shall not exceed 50 per cent of the total of the financial resources allocated to the protection of employees and their spouses and children. So that the Committee can assess the effect given to this provision of the Convention, it trusts that the Government will provide in its next report the statistics requested in the report form under this Article of the Convention both for the private and for the public pensions and health systems.

II. System of pensions administered by the ONP

Part V (Old-age benefit), Article 29, paragraph 2(a). In its previous comments, noting that there was a qualifying period of 20 years of contribution for entitlement to a full retirement pension, the Committee reiterated that according to paragraph 2(a) of Article 29, where the old-age benefit is conditional upon a minimum qualifying period, a reduced benefit shall be secured to a protected person who has completed a qualifying period of 15 years of contribution or employment. In its last report, the Government states that this provision applies only to pension systems in which the length of the qualifying period for entitlement to a pension is 30 years and so should not apply to the Peruvian system, in which the length of the qualifying period has not been set at 30 years. The Government refers in this connection to Act No. 25967, which requires a qualifying period of at least 20 years of contribution for entitlement to old-age benefit. The Committee must nevertheless point out once again that this provision of the Convention applies to all old-age benefit schemes which establish a minimum period of contribution or employment, whether 20, 25 or 30 years, and provides for entitlement to a reduced pension for workers completing a qualifying period of 15 years of contribution or employment. In these circumstances, the Committee can only hope that the Government will re-examine this matter and will take the necessary steps in the near future to ensure that the protected persons may benefit from a reduced pension after 15 years of contribution, in accordance with this provision of the Convention.

The Committee further notes that under the SNP, minimum pensions are secured to persons who have not completed the minimum requirement of 20 years of contribution to the scheme pursuant to Act No. 27655 and Supreme Decree No. 028-2002-EF. It would be grateful if the Government would provide further information on the effect given to these texts in practice.

Part XI (Standards to be complied with by periodical payments), Articles 65 and 66. The Committee notes with interest the measures taken - and the progress made - to increase the amount of the pensions paid by the SNP. It observes in particular that between December 1997 and September 2004 these pensions increased by 86 per cent on average, and by 65 per cent in the case of persons with a total of between 20 and 33 years of contribution. In view of the importance it attaches to this matter, the Committee requests the Government to keep it informed of the application of measures to review the rates of periodical payments in order to take account, inter alia, of rises in the cost of living, in accordance with Articles 65, paragraph 10, and 66, paragraph 8. Please also provide statistical information on the adjustment of pensions, taking into account factors such as the cost of living.

III. Supervision of the private and public pension systems

In its previous comments, the Committee pointed out the need for actuarial studies and calculations to be carried out regularly in order to ensure application of Articles 71, paragraph 3, and 72, paragraph 2, in both the private and the public pensions systems. In reply, the Government states that it appended to its report a technical study used as a basis for a bill on maintenance of the rates of compulsory contributions to pension funds. Since the document in question was not attached to the Government’s report, the Committee requests the Government to supply with its next report other, up-to-date examples of studies on sound finances in public and private institutions that provide old-age benefit.

With regard to the private system, the Committee takes note of Supreme Decree No. 079-2000-EF, and Resolution No. 052-98-EF/SAFP, which concern the minimum earnings of AFPs and the rules for supervision of the SPP. It also notes that, according to the Government, where an AFP fails to reach the profitability threshold, it is liable from its own resources up to the established threshold, failure to meet this obligation being duly penalized. The Committee nonetheless notes that the minimum profitability threshold is determined on the basis of the average earnings of all private pension funds and does not necessarily guarantee real, above-inflation profitability able to protect affiliates effectively. It would be grateful if the Government would indicate whether there are any mechanisms, including prudential arrangements, to preserve the rights of insured persons where profitability thresholds are not met.

IV. Participation of protected persons in the administration of the systems

With regard to the public pensions system, the Committee notes with interest that following the adoption of Act No. 27617 of 1 January 2002 to reorganize the public and private pensions systems, section 3 of which amends section 17 of Legislative Decree No. 817 of 23 April 1996, the Consolidated Reserve Fund (FCR) is now administered by a Board, the officers of which include two representatives of retired persons appointed at the proposal of the National Labour Council.

With regard to the private pensions system, the Committee notes that the Government provides no information as to the measures taken or envisaged to give effect, under the private pensions system, to Article 72, paragraph 1, which provides that where the administration is not entrusted to an institution regulated by the public authorities or to a government department responsible to the legislature, representatives of the persons protected shall participate in the management, or be associated therewith in a consultative capacity, under prescribed conditions. The Committee therefore expresses the hope that the Government will take the necessary steps as soon as possible to bring national laws and regulations into full conformity with this provision of the Convention as regards the private pensions system.

V. Communications from representative organizations
  on the application of the Convention

The Committee notes that in its last report, received in December 2003, the Government does not reply to the communication, received by the Office on 10 April 2003, from the Association of Former Employees of the Peruvian Social Security Institute alleging non-compliance with a decision of 12 January 2001 issued by the Constitutional Court ordering adjustment of the pensions provided under Legislative Decree No. 20530. The Committee trusts that the Government will reply to these allegations in its next report.

With reference to the observations made by the Association of Retired Oil Industry Workers of the Metropolitan Area of Lima and Callao, the Committee notes the Government’s statement that it will keep the Committee informed of the outcome of the legal proceedings currently under way. In these circumstances, the Committee can only refer the Government to its previous comments and hope that the Government will in due course provide the final court decisions on the cases brought in connection with the observations made by the abovementioned association.

With regard to the communication submitted by the World Federation of Trade Unions (WFTU), the Committee notes that the Government’s report contains no information pertaining to this communication. The Government will no doubt reply in its next report to the allegations made by the National Central Association of Retired Workers and Pensioners of Peru (CENAJUPE) regarding the adjustment of pensions.

The Committee raises other matters in a request addressed directly to the Government.

[The Government is asked to reply in detail to the present comments in 2005.]

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The Committee notes that the Government’s report does not contain information on most of the points raised in its previous direct request. It therefore requests the Government to provide full particulars on the following points.

1. Part II (Medical care), Article 7 of the Convention. Act No. 26790 to modernize social security in the area of health, and Supreme Decree No. 009-97-SA, provide that benefits for prevention and health promotion are a priority and their purpose is to maintain the health of the population. Furthermore, compulsory preventive care is provided under promotional prevention programmes run by the Peruvian Social Security Institute (IPSS) and private companies, through their own services and those provided by Health-care providers (EPS) (section 9 of the Act and sections 11 and 19 of the Supreme Decree). The Committee requests the Government to provide detailed information on the implementation of these provisions in practice.

Article 10, paragraph 1. The Committee notes the information provided by the Government to the effect that, while the Act establishes as a minimum requirement that EPS provide regular insured persons with the Health-care contained in the capa simple (simple coverage), they are offering and concluding contracts to provide the additional care contained in the capa compleja (complex coverage). It requests the Government to provide examples of the above contracts.

Article 10, paragraph 2. Section 42(1) of the Supreme Decree provides that the participation of insured persons in the cost of medical care may not exceed 2 per cent of their monthly income in the case of outpatient treatment or 10 per cent in the case of hospitalization, unless the worker explicitly consents to a higher charge when the vote is taken at the enterprise on the choice of Health-care provider and Health-care plan. Furthermore, under section 42(3) of the Supreme Decree, the worker’s contribution to the cost of treatment, whether outpatient or inpatient, may not exceed 10 per cent. The Committee requests the Government to indicate whether the maximum amount specified in section 42(3) can also be exceeded with the insured person’s consent.

Article 12. The Committee would be grateful if the Government would indicate in its next report the period during which medical care must be provided, with an indication of the relevant provisions.

Part XIII (Common provisions) (in conjunction with Parts II, III and VIII), Article 69. The Committee would be grateful if the Government would provide copies of any legal or regulatory texts providing for the possibility of suspending medical or cash sickness and maternity benefits. Please provide in particular a copy of the text governing the conditions and procedures which must be adopted by the IPSS under section 15 of Supreme Decree No. 009-97-SA.

Article 70. Please provide a copy of the regulations adopted by the Health Care Providers Superintendence under section 91 of Supreme Decree No. 009-97-SA, which provides for the settlement of disputes through arbitration, the provisions of which also apply both to persons entitled to Health-care through an EPS and through the employer’s own services. The Committee also requests the Government to indicate whether decisions made by arbitration bodies can be appealed in the ordinary courts. Finally, the Committee would be grateful if the Government would indicate whether disputes between the beneficiaries of Health-care and the IPSS are also subject to arbitration, as this is not set out explicitly in section 91.

Part XIV (Miscellaneous provisions) (in conjunction with Parts II, III and VIII). (a) Article 76. With reference to its observation, the Committee notes the information provided on the geographical scope of the health scheme and on the population covered. It requests the Government to provide, in accordance with Article 76, paragraph 1(b)(i), in the manner required by the report form, the following statistics on the number of persons protected with regard to medical care, as well as sickness and maternity benefit: (a) number of employees protected: (i) under the general scheme; (ii) under the special scheme; (b) total number of employees; and (c) number of employees protected as a percentage of the total number of employees.

(b) Please provide statistical data, as requested in Article 76, paragraph 1(b)(ii), in conjunction with Article 65, concerning the amount of cash benefits for sickness and maternity, in the manner required by the report form under Article 65. Please also indicate whether a ceiling has been set, either for sickness or maternity benefit, or for the wage taken into account for the calculation of these benefits.

Finally, the Committee requests the Government to indicate whether section 52(2) of Supreme Decree No. 009-97-SA, according to which workers may once a year decide individually to transfer from the IPSS to a Health-care provider (EPS) and vice-versa, also applies in the case of new workers referred to in section 53 of the same Supreme Decree.

2. The Committee recalls that the Government had requested information from the Superintendence of Banks and Insurance on the pensions system with a view to preparing the report on the application of the Convention and that it will transmit this information when it receives it. As this information has not reached the Office, the Committee hopes that the Government’s next report will contain detailed information in reply to the points raised in its 1997 direct request relating to the private social security system, which read as follows:

1. Part IX (Invalidity benefit), Article 56 and Article 57, paragraph 1, of the Convention (in relation with Article 65). (a) In accordance with section 100 of Presidential Decree No. 206-92-EF issuing regulations respecting the private pensions system of 6 December 1992 and sections 65 and 66 of Decision No. 141-93-EF/SAFP of 27 August 1993, pensions for total permanent invalidity are equivalent to 70 per cent of monthly remuneration, which may not exceed a maximum level adjusted according to the consumer price index. Furthermore, in accordance with section 112 of the above Presidential Decree No. 206, in the event of permanent total invalidity, insured workers may either: (a) avail themselves of the early pension system referred to in section 40 of Legislative Decree No. 25897 of 27 November 1992; or (b) select the pension system established in section 42 of the above Legislative Decree. Lastly, under the terms of section 117 of Presidential Decree No. 206-92-EF/SAFP, up to 20 per cent of the costs of the medical examinations and procedures required to qualify for invalidity benefit are at the expense of the worker.

The Committee requests the Government to indicate in its next report, on the basis of detailed statistics, whether the amount of invalidity benefit, whatever the type of pension chosen and the cost of the examination and procedures set out in section 117, attains the percentage established by the Convention (40 per cent) for a standard beneficiary (with a wife and two children) whose wage is equal to the wage of a skilled manual male employee.

(b) Please also specify the level of the benefit provided to an invalid who, after becoming an invalid, reaches the age of entitlement to a pension established under section 39 of Legislative Decree No. 25897 of 27 November 1992 (see section 115 of Presidential Decree No. 206-92-EF above).

2. Part XI (Standards to be complied with by periodical payments), Article 65, paragraph 10. In its previous comments, the Committee noted that, under sections 37, 46(e) and 51(a) of Decision No. 141-93-EF/SAFP of 27 August 1993, family and personal lifetime annuities, as well as temporary annuities with deferred retirement benefits are adjusted on a monthly basis as a function of the consumer price index in the city of Lima, which is prepared by the National Statistical Institute, or according to any indicator which may replace it. The Committee requests the Government to provide in its next report all the statistical information requested in the report form under Article 65, Title VI.

3. Part XIII (Common provisions) Article 70. Please indicate the rules governing the right of appeal of insured persons in case of the refusal of the benefit or complaint as to its quantity.

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The Committee notes the information supplied by the Government in its report, and the discussion held in June 2002 in the Committee on the Application of Standards of the Conference. It also notes that the Government requested information from the Superintendence of Banks and Insurance to reply to the Committee’s observations, which will be forwarded when it has been received. In view of the fact that this information has not been provided to the Office, the content of the report, in the same way as in 2001, almost exclusively covers the health scheme, and not therefore the pensions scheme. The Committee therefore hopes that the Government will provide this information in the near future.

Health-care scheme

Part II (Medical care), Article 10 of the Convention (in conjunction with Article 8). With reference to the Committee’s previous comments, the Government reiterates that the benefits provided under the new health system include all the benefits set out in Articles 8 and 9 of the Convention. With regard to domiciliary visiting by general practitioners, the Government indicates that there are no specific regulations. There is a programme of domiciliary care (PADOMI) which provides direct health services by means of general and specialized domiciliary visiting, as well as continuous care for therapeutic purposes and health education. The Committee notes this information. However, it observes that PADOMI is intended for insured persons over 80 years of age and those under 80 years of age who suffer from physical limitations or incapacities. It recalls that, by virtue of Article 8 of the Convention, medical care must be guaranteed in the event of any morbid condition, whatever its cause, for all persons protected, without any age condition. In these conditions, the Committee hopes that the Government will take the necessary measures to ensure that the medical care provided under the new health system explicitly includes, in accordance with Article 10, paragraph 1(a)(ii), of the Convention, domiciliary visiting by general practitioners for all persons protected without any distinction as to age.

Part II (Medical care), Article 9, Part III (Sickness benefit), Article 15, and Part VIII (Maternity benefit), Article 48. With reference to its previous comments, the Committee notes the detailed information and statistics provided by the Government on the geographical coverage of the new health scheme, and on the population insured by both health-care providers (EPS) and by ESSALUD. It notes that the system of EPS is national in scope, since the rules do not set out any limitations or exclusions. However, it notes that in four departments (Amazonas, Huancavelica, Madre de Dios, Moquegua) there is no coverage by any type of service, and that in three others (Apurímac, Huanuco, Pasco) there is only outpatient coverage. The Committee hopes that the Government will take the necessary measures to extend the health system to the above regions. It requests the Government to keep it informed of the progress achieved in this respect. The Committee also notes that, according to the above report, as of November 2001 the system of EPS registered an accumulated total of 330,058 insured persons, representing an increase of 2.73 per cent in relation to November 2000. The Committee requests the Government to provide detailed information on the coverage of the persons protected in the manner required in the report form (see the direct request).

Part XIII (Common provisions) (in conjunction with Parts II, III and VIII), Article 71. With reference to its previous comments, the Committee notes the information provided by the Government on the manner in which the Health-Care Providers Superintendence (SEPS) supervises the operation of the health-care system. It notes in this respect Superintendence Resolution No. 053-2000-SEPS/SD, approving the General Supervision Rules of the SEPS, and Superintendence Resolution No. 026-2000-SPES/CD, published on 6 May 2000, approving the Regulations respecting infringements and penalties for health-service providers. The Committee further notes a supervision report prepared by the SEPS relating to the Clinica del Pacífico S.A.C. It requests the Government to provide, as appropriate, the supervision reports for Novasalud EPS and Rimac Internacional EPS, and the decisions issuing penalties delivered in accordance with Superintendence Resolution No. 026-2000-SEPS/CD (see the Management Evaluation Report for the year 2001, page 5). With regard to the financial viability of the institutions participating in the health scheme, the Government indicates that the legislation (Supreme Decree No. 009-97-SA, and the Regulations issued under Act No. 26790) empowers the SEPS to carry out inspections both during the establishment and functioning of EPS. The Committee once again requests the Government to provide copies of feasibility studies (ibid., page 8).

Article 72. In reply to the Committee’s previous comments, the Government reiterates that the participation of protected persons in the administration of the health system is not obligatory as SEPS is a public body established by the law, the objective of which is to authorize, regulate and supervise the operation of EPS and guarantee the proper use of the funds that they administer. It is the policy of SEPS to disseminate the rights of regular insured persons, and to take into consideration the opinions of the various stakeholders. The Committee notes this information. It shares the opinion of the Government that, with regard to the SEPS, the participation of the persons protected is not obligatory. However, it notes that the EPS are entities which are independent of the SEPS and that the supervision carried out by the latter does not imply the participation of the persons protected in the administration of the EPS. The above was corroborated by the Worker delegate of Peru in June 2002 in the Committee on the Application of Standards of the Conference. In view of the fact that, by virtue of the legislation (sections 15 and 16 of Act No. 26790), enterprises which provide health care, through EPS or their own care services, are entitled to a credit drawn from workers’ contributions equal, in principle, to 25 per cent of the latter, the Committee requests the Government to indicate the measures that it intends to adopt to allow the participation of the persons protected in the administration of EPS and the health-care services of individual enterprises which, according to the Institutional Management Evaluation Report of 2001, amounted on 31 December 2001 to 529 enterprises and entities providing health care.

Pension system

The Committee notes the information concerning the Insurance Standardization Office (OMP) and the funds administered by the directorate of the Consolidated Reserve Fund (FCR), as well as the statistical information on the private pensions system. The Committee notes the statement made by the Government representative in the Committee on the Application of Standards of the Conference in June 2002. However, it notes that once again this year the Government has not replied to the questions raised in its previous comments. In these conditions, it is bound to reiterate the points raised previously.

I.  Private pensions system

In its statement to the Conference Committee in June 2002, the Government indicated that the introduction of the private pensions system was due to the financial exhaustion of the pay-as-you-go system, resulting from a series of related factors. The State is not, however, considering renouncing its obligation to ensure a national social security system in general. In this respect, on 1 January 2002, Act No. 27617 was published, which is still awaiting implementing regulations, but which among other provisions establishes the minimum pension of the private pensions system. These measures cover the transfer of accredited contribution amounts for pensioners through the National Public Savings Fund. The Government is aware of the importance of social security Conventions, in view of the important role that they play in combating poverty. For this reason, it is important to do everything necessary, with the support of the ILO, to find appropriate solutions to harmonize the international standards and obligations with the internal policy and rights. It is therefore necessary to work towards achieving a better level of the pension to be achieved gradually and which has been proposed as an objective of the private pensions system. The Committee notes the above statement. It hopes that in its next report the Government will describe the manner in which the following issues, which have been raised for a number of years, have been resolved.

1. Part V (Old-age benefit), Articles 28 and 29, paragraph 1 (in conjunction with Article 65 or Article 66). In its previous comments, the Committee recalled that the rate of the pensions provided by the private pensions system does not appear to be determined in advance, since it depends on the capital accumulated in individual capitalization accounts, and particularly on the earnings from these accounts. The Committee noted the statistical data on the pensions adjustment factor and the monthly average pension per member, provided by the Government in September 1998, but noted that the data were not adequate to allow it to assess the effect given to the Convention. The Committee notes that, according to the report on the ONP and the funds administered by the directorate of the FCR, Ministry of Economy and Finance, June 2002, page 5, some 25,000 persons received benefits under the private pensions system. The Committee requests the Government to provide information on the amount of such pensions. The Committee once again recalls that, under Article 29, paragraph 1, read in conjunction with Articles 28 and 65 or 66, an average benefit at least equal to 40 per cent of the reference wage has to be secured to a person protected who has completed, prior to the contingency, in accordance with prescribed rules, a qualifying period which may be 30 years of contribution. The Committee would therefore be grateful if the Government would provide statistical data as requested in the report form to allow it to make a full evaluation of the extent to which the old-age benefit, in all cases and irrespective of the type of system selected, attains the level prescribed by the Convention.

In relation to its previous comments, the Committee notes with interest that Act No. 27617 was published on 1 January 2002, but that it is still awaiting implementing regulations, and which among other provisions, establishes the minimum pension for the private pensions system. The Committee requests the Government to provide detailed information on the amount of the minimum pension. In this respect, the Committee recalls that the formula set out in Article 66 can be applied within the framework of a private pensions system, provided that the minimum old-age benefits payable to a standard beneficiary with 30 years of contribution are not less than the minimum amount required by the Convention (40 per cent of the wage of an ordinary adult unskilled male labourer within the meaning of paragraphs 4 and 5 of the above Article). The Committee therefore requests the Government to provide a copy of the above Act and, where appropriate, its implementing regulations, as well as the statistical information required by the report form.

2. Article 30. The Committee once again requests the Government to indicate the measures which have been adopted or are envisaged to guarantee the full application of this provision of the Convention (payment of the benefit throughout the contingency) with regard to the "programmed retirement" system, under which monthly withdrawals may be made from the account until the accumulated capital is exhausted, contrary to the above Article. In this regard, the Committee also refers to its comments on the application of Article 4 of the Old-Age Insurance (Industry, etc.) Convention, 1933 (No. 35).

3. Part IX (Invalidity benefit), Article 58. With reference to its previous comments, the Committee notes that in the case of a worker with permanent invalidity, the "programmed retirement" is provided as a survivors’ pension, with the insured person maintaining ownership of the individual capital account, which generates rights for dependants and is adjusted every quarter in accordance with the current economic situation. The Committee once again requests the Government to indicate how full effect is given to this provision of the Convention (provision of the benefit throughout the contingency or until an old-age benefit becomes payable) in the event of the permanent total invalidity of a worker who has selected the "programmed retirement" system.

4. Part XIII (Common provisions), Article 71, paragraph 1. In relation to its previous comments, the Committee notes that the contributions made by each worker are absolutely independent of each other, and that administrative expenses are covered by a minimal percentage of the contributions made by each of the workers, and that this percentage goes to form part of a fund through which, by means of a mini-redistribution system, the administrative expenses are financed in a general manner. The Committee recalls that the cost of the benefits, certain administrative expenses and the cost of certain commissions are at the exclusive charge of workers who are insured under an AFP, with employers’ contributions being of a voluntary nature. By virtue of Article 71, paragraph 1, "the cost of the benefits ... and the cost of the administration of such benefits shall be borne collectively by way of insurance contributions or taxation or both in a manner which avoids hardship to persons of small means and takes into account the economic situation of the Member and of the classes of persons protected". The Committee once again requests the Government to indicate the measures which have been adopted or are envisaged to give full effect to the Convention in this respect.

5. Article 71, paragraph 2. The Committee once again recalls that, under these provisions of the Convention, the total of the insurance contributions borne by the employees protected shall not exceed 50 per cent of the total of the financial resources allocated to the protection of employees and their spouses and children. In order to be in a position to assess the effect given to this provision of the Convention, the Committee once again requests the Government to provide in its next report the statistics requested in the report form under this Article of the Convention for both the private pensions and health systems and the schemes administered by the public system.

II.  System of pensions administered by the ONP

The Committee once again draws the Government’s attention to the following points.

1. Part V (Old-age benefit), Article 29, paragraph 2(a). With reference to its previous comments, the Committee notes the Government’s statement that, to be entitled to receive a full retirement pension proportional to the amount of the contributions paid, a minimum of 20 years of contributions has been set. In its report received in September 1998, the Government acknowledges that Peruvian law does not envisage the situation described in this provision. The Committee recalls that Article 29, paragraph 2(a), provides that, where the old-age benefit is conditional upon a minimum period of contribution, a reduced benefit shall be secured to a person protected who has completed a qualifying period of 15 years of contribution or employment. The Committee once again points out that the qualifying period laid down in the national legislation is higher than the 15-year period established in the Convention. In these conditions, the Committee is bound to urge the Government to take the necessary measures to ensure that persons protected are entitled to a reduced benefit after 15 years of contribution, as provided by this provision of the Convention.

2. Part XI (Standards to be complied with by periodical payments), Articles 65 and 66. The Committee notes the adoption of resolution No. 001-2002-JEFATURA/ONP, which provides for an increase in the pensions under the National Pension System covered by Legislative Decree No. 19990. It requests the Government to provide a copy of the above resolution. The Committee notes the Government’s statement that the maximum rate of the old-age pension paid by the public pension system is inadequate and not proportional to the contributions made by workers. It also notes that, as from 1 January 1997, the contributions to the national pension system cannot be lower than 13 per cent of the insurable wage of each worker. Furthermore, a National Public Savings Fund has been established, the profits from which will be used to provide supplements to pensioners whose total monthly pensions do not exceed 1,000 new soles. The Committee hopes that the Government will continue providing information on the measures adopted or envisaged to increase the amount of the benefits paid by the national pensions system with a view to attaining the level prescribed in the Convention. Furthermore, the Committee once again requests the Government to provide all the statistics required in this respect by the report form under Article 65 or 66, including statistics on the review of the long-term benefits to take into account changes in the cost of living. In this respect, the Committee once again recalls the importance that it attaches to the revision of the rates of current periodical payments in the case of long-term benefits, as required by Article 65, paragraph 10, and Article 66, paragraph 8. The Committee requests the Government to provide a copy of the above resolution.

III.  Supervision of the private and public pensions systems

The Government indicates in its report received in September 1998 that the State assumes overall responsibility for matters relating to the provision of benefits and takes any measures required for this purpose and for ensuring the sound administration of institutions and services involved in the implementation of the Convention. The Committee would be grateful if the Government would indicate the specific measures adopted to apply Article 71, paragraph 3, and Article 72, paragraph 2, with regard to both the private and the public pensions systems. In this context, the Committee recalls the importance of carrying out regularly the actuarial studies and calculations required by Article 71, paragraph 3.

With particular reference to the private system, the Committee notes that, by virtue of section 23 of Supreme Decree No. 054-97-EF, investments made by AFPs must generate a minimum level of profit. Furthermore, the Government is responsible for determining the criteria of minimum profitability (guaranteed by the statutory reserve formed from the AFPs’ own funds and other sources). The Committee would be grateful if the Government would also indicate in its next report all the measures taken to ensure the minimum level of profits generated by AFPs for their members and if it would provide a copy of the Supreme Decree approved by the Minister of Economics and Finance.

IV.  Participation of persons protected
  in the administration of the system

1. The Committee once again requests the Government to indicate the measures which have been taken or are envisaged, in the context of the private pensions system, to give effect to Article 72, paragraph 1, which provides that, where the administration is not entrusted to an institution regulated by the public authorities or to a government department responsible to the legislature, representatives of the persons protected shall participate in the management, or be associated therewith in a consultative capacity, under prescribed conditions. In this respect, the Committee refers to the information provided by the Government in its report of 2001 on the application of Convention No. 35, and trusts that the Government will indicate any new measures which have been adopted to allow the participation by the persons protected in the administration of the private pensions system.

2. The Committee requests the Government to indicate the manner in which representatives of the persons protected participate in the management of the pensions system administered by the Insurance Standards Office (ONP), and particularly whether they are represented on the management bodies of the ONP.

With reference to the observations made by the Association of Retired Oil Industry Workers of the Metropolitan Area of Lima y Callao, the Committee notes the Government’s statement that no authority can address issues pending before a judicial body, nor interfere in the exercise of its functions. The Committee refers to its previous comments and trusts that the Government will in due course provide copies of any final judicial decisions on cases brought in connection with the observations made by the Association of Retired Oil Industry Workers of the Metropolitan Area of Lima y Callao.

With reference to a communication submitted by the World Federation of Trade Unions, the Committee notes the information provided by the Government to the effect that a special commission is entrusted with preparing a report on the situation of insurance schemes covered by Legislative Decrees Nos. 1990 and 20530, and others under the responsibility of the State. Once this commission has submitted its report, the Government will be able to determine the merits of the matters raised by the National Central Association of Retired Workers and Pensioners of Peru (CENAJUPE).

While fully aware of the complexity of the issues raised, the Committee trusts that the Government, in accordance with the statement by its representative in June 2002, will seek advice from the competent services of the Office on the organization and working of the public and private social security systems in the areas of health care and pensions. The Committee trusts that the Government will redouble its efforts to provide the information requested in the present observation, as well as in its direct request.

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

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The Committee notes that the Government requested those responsible for the Social Health Insurance Scheme (ESSALUD), the Insurance Standards Office (ONP) and the Health Providers Superintendence (SEPS) to provide, in their fields of competence, the necessary information for the preparation of the report on the application of this Convention and that they would transmit this information as soon as it was available. Since the Government’s report contained no information on the points raised in its direct request, the Committee is bound to reiterate its previous comments which read as follows:

I. Health care system.  With reference to its observation, the Committee would like to receive detailed information on the following points.

  Part II (Medical care), Article 7 of the Convention. Act No. 26790 to modernize social security in the area of health, and Supreme Decree No. 009-97-SA provide that benefits for prevention and health promotion are a priority and their purpose is to maintain the health of the population. In addition, compulsory preventive benefits are provided under preventive promotional programmes run by the Peruvian Social Security Institute (IPSS) and private companies, on the basis of their own services or those provided by health care providers (EPS) (section 9 of the Act and sections 11 and 19 of the Supreme Decree). The Committee requests the Government to provide detailed information on the implementation of these provisions.

  Article 10, paragraph 2. Section 42(1) of the above Supreme Decree provides that participation of insured persons in the costs of medical care may not exceed 2 per cent of their monthly income in the case of outpatient treatment or 10 per cent in the case of hospitalization, unless the worker expressly consents to a higher charge when the vote is taken at the enterprise on the choice of health care provider and health care plan. In addition, under section 42(3) of the Supreme Decree, the worker’s contribution to the cost of treatment, whether outpatient or inpatient, may not exceed 10 per cent. The Committee requests the Government to indicate whether the maximum amount specified in section 42(3) can also be exceeded with the member’s consent.

  Article 12. The Committee hopes that the Government will indicate in its next report the period during which medical benefits must be provided and indicate the relevant provisions.

  Part XIII (Common provisions) (in conjunction with Parts II, III and VIII), Article 69. The Committee would be grateful if the Government would provide copies of any legal or regulatory texts providing for the possibility of suspending medical or cash sickness and maternity benefits. Please provide in particular a copy of the text governing the conditions and procedures which must be adopted by the IPSS to implement section 15 of Supreme Decree No. 009-97-SA.

  Article 70. Please provide a copy of the regulations adopted by the Supervisory Board of the health care providers to implement section 91 of Supreme Decree No. 009-97-SA which provides that the settlement of disputes through arbitration, the provisions which also apply to persons affiliated to health care providers (EPS) and to persons who receive health care benefits provided by the employer. The Committee also requests the Government to indicate whether decisions made by arbitration bodies can be challenged in court. Lastly the Committee would be grateful if the Government would indicate whether disputes between the beneficiaries of health care benefits and the IPSS are also subject to arbitration, given that this is not explicitly clear from section 91.

  Part XIV (Miscellaneous provisions) (in conjunction with Parts II, III and VIII). (a) Article 76. Please provide statistical data on the coverage of medical care and the sickness and maternity benefits required under Article 76, paragraph 1(b)(i), in the form required by the report form under this Article of the Convention.

(b) Please provide statistical data, as requested in Article 76, paragraph 1(b)(ii) in conjunction with Article 65, concerning the amount of cash benefits for sickness and maternity, in the form required by the report form under Article 65. Please also indicate whether a maximum amount is fixed, either for sickness and maternity benefits or for the wages on which the calculation of the benefits is based.

Lastly, the Committee requests the Government to indicate whether section 52(2) of Supreme Decree No. 009-97-SA, according to which workers may once per year decide individually to transfer from the IPSS to a health care provider (EPS) and vice versa, also applies to the case of new workers referred to in section 53 of the same Supreme Decree.

II. The Committee hopes that the Government’s next report will contain detailed information in reply to the points raised in its direct request of 1997 concerning the private pensions system.

[The Government is asked to report in detail in 2002.]

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The Committee notes the Government’s report and observes that it contains very summary information on the points made by the Committee of Experts in its previous observation. The Committee therefore hopes that the Government will supply in its next report detailed information on the application in practice and in law of the health care scheme and the private pension scheme which entered into force in 1997, for each Article of the Convention, in accordance with the report form.

Health care scheme

In its previous comments, the Committee asked the Government to supply detailed information on the establishment of the new health scheme following adoption of Act No. 26790 to modernize social security in the area of health and of Supreme Decree No. 009 97 SA, applying this Act, which entered into force in 1997. It therefore asked the Government to supply a detailed report containing information on legislation and practice for each provision of the Convention.

Given the fundamental changes made by the new legislation in the area of health care, the Committee once again expresses the hope that the Government, in its report, will reply to each of the following points raised in the Committee’s earlier observation.

Part II (Medical care), Article 10 of the Convention (in conjunction with Article 8). Section 12 of Supreme Decree No. 009-97-SA specifies that curative medical care must include both outpatient and hospital in-patient medical care, medication, prostheses, necessary orthopaedic appliances and rehabilitative services. As regards maternity benefits, they should cover care during pregnancy, confinement and the postnatal period. Under section 9 of Act No. 26790 and sections 11 and 20 of the above Supreme Decree, the benefits provided may not be inferior in scope to the minimum health plan set out in Annex 2 of the Supreme Decree, read in conjunction with Annex 3. Care comes under either simple cover (capa simple) or complex cover (capa compleja). Simple cover includes the most frequent and least complex types of medical treatment and is described in Annex 1 of the Supreme Decree. This simple cover is paid for either by the Peruvian Social Security Institute (IPSS) or by enterprises, through their own services or through health-care plans contracted with health care providers (EPS). Complex cover is provided by the IPSS (section 34 of the Supreme Decree). Moreover section 90 of the Supreme Decree describes how in practice the responsibilities are to be apportioned between the EPS and the IPSS.

In its report, the Government merely indicates that the health benefits provided in the Convention are covered by the health area of social security. In these circumstances, the Committee reiterates its request to the Government to provide detailed information on the implementation of the abovementioned provisions of the Act and of the Supreme Decree so as to allow it better to assess the application in practice of Article 8 of the Convention, according to which contingencies covered must include any morbid condition, and Article 10 of the Convention, which specifies the nature of medical benefits which must be provided. In this regard, the Committee also hopes that the Government will indicate which provisions govern the domiciliary visits by general medical practitioners provided for in Article 10, paragraph 1(a)(i). Finally, the Committee hopes that the Government will provide with its next report examples of insurance policies concluded with an EPS, and specimens of membership forms.

Part II (Medical care), Article 9, Part III (Sickness benefit), Article 15, and Part VIII (Maternity benefit), Article 48. In its previous comments, the Committee requested the Government to provide detailed information on the geographical coverage of the new health care system in respect of both the IPSS and of the EPS, and indicate the regions in which the EPS has not yet been established. In its report, the Government indicates that the EPS has regional scope and that there is no statutory limitation or restriction on any region in the country; hence 20 departments of the country are beneficiaries under this system; furthermore, geographical cover of the new ESSALUD scheme is provided by health care centres comprising 112 hospitals, 42 medical centres, 193 health stations and 31 outpatient clinics. The Committee notes this information. It asks the Government once again to specify the regions in which the EPS have not yet been established. It also asks it to provide a copy of the latest EPS report, along with statistical information on the persons insured and covered in regard to both the ESSALUD and the EPS.

Part XIII (Common provisions) (in conjunction with Parts II, III and VIII), Article 71. In reply to the Committee’s previous comments regarding the manner in which the health providers superintendence (SEPS) supervises the activities of the EPS and ensures the proper use of the funds managed by those bodies, the Government indicates that the inspection or supervision system of the SEPS system is characterized by the principles of prevention, permanence, continuity and integrality, and for this purpose Superintendence Decision No. 053 2000 SEPS/CD, was adopted and published on 30 August 2000; this standard approves the general regulations for supervision of the SEPS. The Committee notes this information. The Committee asks the Government to supply a copy of the abovementioned decision and regulations along with detailed information on the manner in which the SEPS exercises this supervision in practice, including copies of inspection reports or other relevant official documents. In this regard, the Committee noted that under section 2 of the Act and sections 2(a) and 3 of the regulations, the IPSS is responsible for administering social security in the field of health care. It would be grateful if the Government would specify in what manner the IPSS carries out this mandate, in particular with regard to the EPS.

In its previous comments, the Committee asked the Government to indicate whether, when the new system of social security in the field of health was established, any actuarial studies were undertaken to establish the financial viability of the participant bodies, in particular the IPSS which will continue to bear responsibility for the longer term and more complex cases of illness. The Government indicates in its report that actuarial studies guarantee the viability of the EPS and ESSALUD; for this it is established that the representative of the organizers of an EPS must submit to the superintendence an economic financial feasibility study; there is also a requirement for its establishment that a registered capital must be subscribed and paid up and must be updated periodically. The abovementioned requirements make it possible to guarantee that the EPS which come into the system are sufficiently economically sound to supply satisfactory health services. The Committee notes the Government’s statement. The Committee again asks the Government to supply a copy of the studies actually carried out and recalls that such studies appear to be all the more necessary since, according to the new legislation, the enterprises which provide health care through the intermediary of the EPS or through their own services are entitled to a credit from workers’ contributions equal in principle to 25 per cent of those contributions (sections 15 and 16 of the Act). The Committee reiterates its request that the Government will provide information on the manner in which the controlling authority will supervise the implementation in practice of the minimum health care plans, both with regard to the EPS and to employers’ own health care services.

Article 72. In reply to previous comments of the Committee, the Government indicates that the participation of protected persons is not obligatory in the case of the SEPS since it is a decentralized public body in the health sector whose function is to authorize, regulate and supervise the operation of the EPS and ensure the correct use of the funds administered. The Committee notes this information. It again asks the Government to supply detailed information on the participation of protected persons in the administration of the system, particularly in the EPS and employers’ health care services. It also asks the Government to supply copies of official communication No. 230-2000-SEPS/IG of 15 September 2000 and letter No. 4231-GCAJ-ESSALUD-2000 of 15 December 2000, communicated by the SEPS and ESSALUD respectively.

Pensions scheme

The Committee notes that the Government’s report does not reply to any of the questions raised in the Committee’s previous comments in regard to the private pensions system. It must therefore reiterate the points raised previously.

  I. Private pensions system

The Committee takes note of the Government’s reports. It also notes the adoption of Supreme Decree No. 054-97-EF of 13 May 1997 approving the single ordained text of the Act respecting the private system of administration of pension funds. In its report the Government reiterates that the private pensions system cannot be examined within the scope of Convention No. 102. The Government refers to the conclusions of the Conference Committee on the Application of Standards, which in June 1997 agreed that the coexistence within the social security system of both a public and a private scheme, as has been the case in Peru since 1992, is not in itself incompatible with the Convention, since the Convention allows the minimum level of social security to be maintained through various methods. The Government also draws attention to the flexibility of Convention No. 102, which allows various approaches to attaining the same level of social security in order to take into account the wide range of national solutions and the rapid and constant developments in systems of protection. The Government points out that the national pensions system and the private pensions system were designed to coexist.

The Government indicates that workers entering the Peruvian labour market for the first time have, in principle, the option of joining one or other of the systems. However, the Committee notes that, in the event a worker who has not subscribed to the private pensions system starts work, the employer is obliged to sign him up with the Pension Fund Administrator (AFP) of his choice, unless the worker indicates in writing within ten days that he wishes to join or remain in the National Pensions System (section 6(2) of Supreme Decree No. 054-97-EF). The Committee once again recalls that workers registered with an AFP can no longer rejoin the system administered by the Insurance Standardization Office (ONP). The Committee therefore considers that, in practice, the private pensions system which coexists with the public system may eventually replace it.

The Committee agrees that Convention No. 102 was conceived in a highly flexible manner and that it is possible to achieve the same level of social security through different approaches, the Conference having deliberately refused to adopt a rigid terminology. Nevertheless, the Convention embodies certain principles of general applicability for the organization and functioning of social security systems (Articles 71 and 72 of the Convention). In order to allow it to assess how effect is given to these principles and to other provisions of the Convention, the Committee again urges the Government to indicate in its next report how the questions set out below, which have been raised for a number of years, have been resolved.

1. Part V (Old-age benefit), Articles 28 and 29, paragraph 1 (in conjunction with Articles 65 or Article 66). The Committee recalls that the rate of the pensions provided by the private pensions system does not appear to be determined in advance, since it depends on the capital accumulated in individual capitalization accounts, and particularly on the earnings from these accounts. The Committee takes note of the statistical data provided by the Government in September 1998 on the pensions adjustment factor and the monthly average pension per member; these data are not, however, sufficient to allow the Committee to assess the effect given to the Convention. The Committee once again recalls that, under Article 29, paragraph 1, read in conjunction with Articles 28 and 65 or 66, an average benefit at least equal to 40 per cent of the reference wage has to be secured to a person protected who has completed, prior to the contingency, in accordance with prescribed rules, a qualifying period which may be 30 years of contribution. The Committee would therefore be grateful if the Government would provide statistical data as requested in the report form, such as to allow it to make a full evaluation of the extent to which the old-age benefit, in all cases and irrespective of the type of system selected, attains the level prescribed by the Convention.

The Committee takes note of the seventh and final provision of Supreme Decree No. 054-97-EF which provides that the requirements and conditions such as to allow the private pensions system to guarantee a minimum retirement pension for its members shall be established by a Supreme Decree approved by the Ministry of Economics and Finance. The Committee recalls in this regard that Article 66 of the Convention can be applied within the framework of a private pensions system provided that the minimum old-age benefits payable to a standard beneficiary with 30 years of contribution are not less than the minimum amount required by the Convention (40 per cent of the wages of an ordinary adult male unskilled labourer within the meaning of paragraphs 4 and 5 of this Article). The Committee would therefore be grateful if the Government in its next report would provide a copy of the Supreme Decree adopted in implementation of the abovementioned final provision of Supreme Decree No. 954-97-EF, as well as statistical information required by the report form.

2. Article 30. The Committee again asks the Government to indicate the measures adopted or envisaged to guarantee the full application of this provision of the Convention (payment of the benefit throughout the contingency) with regard to the "programmed retirement" system, under which monthly withdrawals may be made from the account until the accumulated capital is exhausted, contrary to the above Article. In this regard, the Committee also refers to its comments on the application of Article 4 of the Old-Age Insurance (Industry, etc.) Convention, 1933 (No. 35).

3. Part IX (Invalidity benefit), Article 58. The Committee again asks the Government to indicate how full effect is given to this provision of the Convention (provision of the benefit throughout the contingency or until an old-age benefit becomes payable) in the event of the permanent total invalidity of a worker who has selected the "programmed retirement" system.

4. Part XIII (Common provisions), Article 71, paragraph 1. The Committee notes that the cost of the benefits, certain administrative expenses and certain commissions are paid entirely by the worker who is insured under an AFP. Employers’ contributions appear to be of a voluntary nature. According to Article 71, paragraph 1, "the cost of the benefits provided ... and the cost of the administration of such benefits should be borne collectively by way of insurance contributions or taxation or both in a manner which avoids hardship to persons of small means and takes into account the economic situation of the member and of the classes of the persons protected". The Committee once again asks the Government to indicate the measures which have been adopted or envisaged to give full effect to the Convention in this respect.

5. Article 71, paragraph 2. The Committee again recalls that, under this provision of the Convention, the total of the insurance contributions borne by the employees protected shall not exceed 50 per cent of the total of the financial resources allocated to the protection of employees and their spouses and children. In order to be in a position to assess the effect given to this provision of the Convention, the Committee again asks the Government to provide in its next report the statistics requested in the report form under this Article of the Convention for both the private pensions and health systems and the schemes administered by the public system.

  II. System of pensions administered by the ONP

The Committee again draws the Government’s attention to the following specific points.

1. Part V (Old-age benefit), Article 29, paragraph 2(a). In the report received in September 1998, the Government acknowledges that Peruvian law does not envisage a case of the kind described in this provision. The Committee recalls that Article 29, paragraph 2(a), provides that, where the old-age benefit is conditional upon a minimum period of contribution, a reduced benefit shall be secured to any insured person who has completed a qualifying period of 15 years of contribution or employment. The Committee again points out that the qualifying period laid down in the legislation is higher than the 15-year period established in the Convention. In these circumstances, the Committee can only ask the Government once again to take the necessary measures to ensure that persons protected are entitled to a reduced benefit after 15 years of contribution, as provided by this provision of the Convention.

2. Part XI (Calculation of periodical payments), Articles 65 and 66. The Committee notes the declaration of the Government according to which the maximum amount of the old-age pension paid by the National Pensions System is insufficient and is not proportionate to the workers’ contributions. It also notes that, as of 1 January 1997, contributions to the National Pensions System will be not less than 13 per cent of the total insurable income of each worker. In addition, a National Public Savings Fund has been established, profits from which will be used to pay benefits to pensioners whose total monthly pensions do not exceed 1,000 new soles. The Committee hopes that the Government will be able to go on providing information on the measures taken or envisaged to increase the pensions paid by the National Pensions System so as to reach the level prescribed by the Convention. The Committee further asks the Government to provide all statistics required by the report form under Article 65 or 66, including statistics on the review of long-term benefits to take account of changes in the cost of living. The Committee again recalls the importance that it attaches to the revision of the rates of current periodical payments in the case of long-term benefits, as required by Article 65, paragraph 10, and Article 66, paragraph 8.

III. Supervision of the private and public pensions systems

In its report, received in September 1998, the Government indicates that the State assumes overall responsibility for matters relating to the provision of benefits and takes any measures required for this purpose and for ensuring sound administration of institutions and services involved in implementing the Convention. The Committee would be grateful if the Government would indicate the specific measures adopted to apply Article 71, paragraph 3, and Article 72, paragraph 2, with regard both to the private and public pensions systems. In this context, the Committee recalls the importance of the regular actuarial studies and calculations required by Article 71, paragraph 3.

As regards the private system, the Committee takes note of the fact that, in accordance with section 23 of Supreme Decree No. 054-97-EF, investments made by the AFP are required to generate a certain minimum level of profits. Moreover the Government is responsible for determining criteria of minimum profitability (guaranteed by the statutory reserve formed from the AFP’s own funds and other sources). The Committee would be grateful if the Government would also indicate in its next report all the measures taken to ensure the minimum level of profits generated by the AFP for its members and provide a copy of the Supreme Decree approved by the Minister of Economics and Finance.

  IV. Participation of persons protected in the administration of the system

1. The Committee again asks the Government to indicate the measures which have been taken or are envisaged, in the context of the private pensions system, to give effect to Article 72, paragraph 1, of the Convention, according to which, where the administration is not entrusted to an institution regulated by the public authorities or to a government department responsible to the legislature, representatives of the persons protected shall participate in or be associated with the management, in a consultative capacity, under prescribed conditions. In this context, the Committee refers to information supplied by the Government in its report on the application of Convention No. 35, and trusts that the Government will indicate any new measures taken to allow the participation by the persons protected in the administration of the private pensions system.

2. The Committee asks the Government to indicate the manner in which representatives of the persons protected participate in the management of the pensions system administered by the ONP, and in particular whether they are represented on the management bodies of the ONP.

The Committee recalls the observations received from the Association of Retired Oil Industry Workers of the Metropolitan Area of Lima and Callao and notes the Government’s statement to the effect that no authority can take up cases that are still before the courts or interfere with the work of the courts. The Committee refers to its previous comments and trusts that the Government will in due course provide copies of any final judicial decisions on cases brought in connection with the observations made by the Association of Retired Oil Industry Workers of the Metropolitan Area of Lima and Callao.

With reference to a communication submitted by the World Federation of Trade Unions, the Committee notes the information supplied by the Government to the effect that a special commission will be entrusted with preparing a report on the situation of savings schemes included in Legislative Decrees No. 1990, 20530 and others under the State. Once this commission has presented its report, the Government will be able to determine the admissibility of the complaint made by the National Central Association of retired workers and pensioners of Peru (CENAJUPE).

While fully aware of the complexity of the issues raised, the Committee trusts that the Government, if it deems appropriate, will seek advice and assistance from the competent services of the Office on the organization and working of the public and private social security systems in the area of health care and pensions. The Committee trusts the Government will redouble its efforts to provide the information requested in the present observation and in its earlier direct request.

[The Government is asked to report in detail in 2002.]

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The Committee notes that the Government has requested those responsible for the Social Health Insurance Scheme (ESSALUD), the Insurance Standards Office (ONP) and the Health Providers Superintendence (SEPS) to provide, in their fields of competence, the necessary information for the preparation of the report on the application of this Convention and that this information will be provided as soon as it is available. Since a detailed report on the application of the Convention still has not been provided to the Office, the Committee is bound to repeat its previous comments, which read as follows:

I.  Health care system.  With reference to its observation, the Committee would like to receive detailed information on the following points.

  Part II (Medical care), Article 7 of the Convention.  Act No. 26790 to modernize social security in the area of health, and Supreme Decree No. 009-97-SA provide that benefits for prevention and health promotion are a priority and their purpose is to maintain the health of the population. In addition, compulsory preventive benefits are provided under preventive promotional programmes run by the Peruvian Social Security Institute (IPSS) and private companies, on the basis of their own services or those provided by health care providers (EPS) (section 9 of the Act and sections 11 and 19 of the Supreme Decree). The Committee requests the Government to provide detailed information on the implementation of these provisions.

  Article 10, paragraph 2.  Section 42(1) of the above Supreme Decree provides that participation of insured persons in the costs of medical care may not exceed 2 per cent of their monthly income in the case of outpatient treatment or 10 per cent in the case of hospitalization, unless the worker expressly consents to a higher charge when the vote is taken at the enterprise on the choice of health care provider and health care plan. In addition, under section 42(3) of the Supreme Decree, the worker’s contribution to the cost of treatment, whether outpatient or inpatient, may not exceed 10 per cent. The Committee requests the Government to indicate whether the maximum amount specified in section 42(3) can also be exceeded with the member’s consent.

  Article 12.  The Committee hopes that the Government will indicate in its next report the period during which medical benefits must be provided and indicate the relevant provisions.

  Part XIII (Common provisions) (in conjunction with Parts II, III and VIII), Article 69.  The Committee would be grateful if the Government would provide copies of any legal or regulatory texts providing for the possibility of suspending medical or cash sickness and maternity benefits. Please provide in particular a copy of the text governing the conditions and procedures which must be adopted by the IPSS to implement section 15 of Supreme Decree No. 009-97-SA.

  Article 70.  Please provide a copy of the regulations adopted by the Supervisory Board of the health care providers to implement section 91 of Supreme Decree No. 009-97-SA which provides that the settlement of disputes through arbitration, the provisions which also apply to persons affiliated to health care providers (EPS) and to persons who receive health care benefits provided by the employer. The Committee also requests the Government to indicate whether decisions made by arbitration bodies can be challenged in court. Lastly the Committee would be grateful if the Government would indicate whether disputes between the beneficiaries of health care benefits and the IPSS are also subject to arbitration, given that this is not explicitly clear from section 91.

  Part XIV (Miscellaneous provisions) (in conjunction with Parts II, III and VIII).  (a)  Article 76.  Please provide statistical data on the coverage of medical care and the sickness and maternity benefits required under Article 76, paragraph 1(b)(i), in the form required by the report form under this Article of the Convention.

(b)  Please provide statistical data, as requested in Article 76, paragraph 1(b)(ii) in conjunction with Article 65, concerning the amount of cash benefits for sickness and maternity, in the form required by the report form under Article 65. Please also indicate whether a maximum amount is fixed, either for sickness and maternity benefits or for the wages on which the calculation of the benefits is based.

Lastly, the Committee requests the Government to indicate whether section 52(2) of Supreme Decree No. 009-97-SA, according to which workers may once per year decide individually to transfer from the IPSS to a health care provider (EPS) and vice versa, also applies to the case of new workers referred to in section 53 of the same Supreme Decree.

II.  The Committee hopes that the Government’s next report will contain detailed information in reply to the points raised in its direct request of 1997 concerning the private pensions system.

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The Committee notes that the Government has requested those responsible for the Social Health Insurance Scheme (ESSALUD), the Insurance Standards Office (ONP) and the Health Providers Superintendence (SEPS) to provide, in their fields of competence, the necessary information for the preparation of the report on the application of this Convention and that this information will be provided as soon as it is available. Since a detailed report on the application of the Convention has still not been provided to the Office, the Committee is bound to repeat its previous observation, which read as follows:

Health care scheme

In its previous comments, the Committee had requested the Government to provide detailed information on the implementation of the new health care system following the adoption of Act No. 26790 to modernize social security in the area of health and of its implementing regulations in Supreme Decree No. 009-97-SA, which entered into force in 1997. The Committee had therefore asked the Government to provide a detailed report giving information on the legislation and the practice with regard to each provision of the Convention. In its report, the Government indicates that, in view of the recent publication of this new legislation, it is unable at this stage to provide information on the implementation of the new system. Moreover, in its report on the Sickness Insurance (Industry) Convention, 1927 (No. 24), the Government sets out a number of general observations. The Committee notes this information and the adoption of Supreme Decree No. 001-98-SA, a copy of which is provided by the Government. The Committee also notes the observations made on 22 May 1998 by the Single Trade Union of Technicians and Specialist Auxiliary Staff of the Peruvian Social Security Institute alleging among other things that the purpose of Act No. 26790 and its implementing regulations is to dismantle social security and the Peruvian Social Security Institute (IPSS) by placing them in the hands of private individuals and foreign capital. In its reply, the Government denies this allegation and emphasizes that it has no intention of privatizing social security in the country, and that the IPSS should be regarded as administering the general scheme and the health care providers (EPS) as an option available to workers.

The Committee recalls that Act No. 26790 to modernize social security in the area of health and Supreme Decree No. 009-97-SA provide for the involvement of the private sector in the area of health care. The health care services provided by the IPSS are complemented by the health care plans and programmes of the health care providers (EPS). The latter can be public or private enterprises or institutions independent of the IPSS whose sole purpose is to provide health care services through their own infrastructure or third-party facilities. In this new system, workers who are members of private health care programmes will receive cash medical benefits from the IPSS in the event of serious illness and from their health care provider (or their employer’s own health care services) for routine ailments. Employers providing health care, either through an EPS or through their own services, are given a credit for the amount of their contributions to the IPSS (sections 15 and 16 of the Act). The Act in principle guarantees that workers may freely choose whether to join the IPSS or an EPS (section 15 of Act No. 26790 and sections 46, 50, 51 and 52 of Supreme Decree No. 009-97-SA).

Given the fundamental changes made by the new legislation in the area of health care, the Committee once again expresses the hope that the Government will provide detailed information in its next report on the legislation and the practice with regard to each of the Articles of the Convention, in accordance with the report form. While awaiting this information, the Committee wishes to draw the Government’s attention to the following points.

  Part II (Medical care), Article 10 of the Convention (in conjunction with Article 8). Section 12 of Supreme Decree No. 009-97-SA specifies that curative medical care must include both out-patient and hospital in-patient medical care, medication, prostheses, necessary orthopaedic appliances and rehabilitative services. As regards maternity benefits, they should cover care during pregnancy, confinement and the postnatal period. Under section 9 of Act No. 26790 and sections 11 and 20 of the above Supreme Decree, the benefits provided may not be inferior in scope to the minimum health plan set out in Annex 2 of the Supreme Decree, read in conjunction with Annex 3. Care comes under either simple cover (capa simple) or complex cover (capa compleja). Simple cover includes the most frequent and least complex types of medical treatment and is described in Annex 1 of the Supreme Decree. This simple cover is paid for either by the IPSS or by enterprises, through their own services or through health care plans contracted with an EPS. Complex cover is provided by the IPSS (section 34 of the Supreme Decree). Moreover section 90 of the Supreme Decree describes how in practice the responsibilities are to be apportioned between the EPS and the IPSS.

The Committee hopes that the Government will provide detailed information on the implementation of the abovementioned provisions of the Act and of the Supreme Decree so as to allow it better to assess the application in practice of Article 8 of the Convention, according to which contingencies covered must include any morbid condition, and Article 10 of the Convention, which specifies the nature of medical benefits which must be provided. In this regard, the Committee also hopes that the Government will indicate which provisions govern the domiciliary visits by general medical practitioners provided for in Article 10, paragraph 1(a)(i). Finally, the Committee hopes that the Government will provide with its next report examples of insurance policies concluded with an EPS, and specimens of membership forms.

  Part II (Medical care), Article 9, Part III (Sickness benefit), Article 15, and Part VIII (Maternity benefit), Article 48. The Committee hopes that the Government will provide detailed information on the geographical coverage of the new health care system in respect both of the IPSS and of the EPS, and indicate the regions in which the EPS have not yet been established.

  Part XIII (Common provisions) (in conjunction with Parts II, III and VIII), Article 71.  The Committee notes the establishment of the Superintending Board of health care providers (SEPS) which is responsible for authorizing, regulating and supervising the activities of the EPS and for ensuring the correct use of the funds managed by those bodies (section 2(d) of the aforementioned Supreme Decree). The SEPS is a decentralized public health body financed by levies from the bodies subordinate to it. The Committee hopes that the Government will provide detailed information on the manner in which the SEPS carries out supervision in practice, including copies of any inspection reports or other relevant official documents. In this regard, the Committee notes that, under section 2 of the Act, and sections 2(a) and 3 of the Regulations, the IPSS is responsible for administering social security in the field of health care. The Committee would like the Government to clarify the manner in which the IPSS carries out this mandate, in particular with regard to the EPS.

The Committee also hopes that the Government will indicate whether, when the new system of social security in the field of health was established, any actuarial studies were undertaken into the financial viability of the participant bodies, in particular the IPSS which will continue to bear responsibility for the longer term and more complex cases of illness. If such studies were carried out, the Committee requests the Government to provide copies of any such studies. Studies of this kind appear to be all the more necessary given that enterprises which provide health care through the intermediary of the EPS or through their own services are entitled to a credit for workers’ contributions equal in principle to 25 per cent of those contributions (sections 15 and 16 of the Act). The Committee hopes further that the Government will provide information on the manner in which the controlling authority will supervise the implementation in practice of the minimum health care plans, both by the EPS and employers’ own health care services.

  Article 72.  The Committee hopes that the Government will provide detailed information on the participation of protected persons in the administration of the system, particularly in the EPS and employers’ health care services. It also hopes that the Government will indicate whether persons protected are represented on the management boards of the SEPS.

Pensions scheme

I.  Private pensions system

The Committee takes note of the Government’s reports. It also notes the adoption of Supreme Decree No. 054-97-EF of 13 May 1997 approving the single ordained text of the Act respecting the private system of administration of pension funds. In its report the Government reiterates that the private pensions system cannot be examined within the scope of Convention No. 102. The Government refers to the conclusions of the Conference Committee on the Application of Standards, which in June 1997 agreed that the coexistence within the social security system of both a public and a private scheme, as has been the case in Peru since 1992, is not in itself incompatible with the Convention, since the Convention allows the minimum level of social security to be maintained through various methods. The Government also draws attention to the flexibility of Convention No. 102, which allows various approaches to attaining the same level of social security in order to take into account the wide range of national solutions and the rapid and constant developments in systems of protection. The Government points out that the national pensions system and the private pensions system were designed to coexist.

The Government indicates that workers entering the Peruvian labour market for the first time have, in principle, the option of joining one or other of the systems. However, the Committee notes that, in the event a worker who has not subscribed to the private pensions system starts work, the employer is obliged to sign him up with the Pension Fund Administrator (AFP) of his choice, unless the worker indicates in writing within ten days that he wishes to join or remain in the National Pensions System (section 6(2) of Supreme Decree No. 054-97-EF). The Committee once again recalls that workers registered with an AFP can no longer rejoin the system administered by the Insurance Standardization Office (ONP). The Committee therefore considers that, in practice, the private pensions system which coexists with the public system may eventually replace it.

The Committee agrees that Convention No. 102 was conceived in a highly flexible manner and that it is possible to achieve the same level of social security through different approaches, the Conference having deliberately refused to adopt a rigid terminology. Nevertheless, the Convention embodies certain principles of general applicability for the organization and functioning of social security systems (Articles 71 and 72 of the Convention). In order to allow it to assess how effect is given to these principles and to other provisions of the Convention, the Committee again urges the Government to indicate in its next report how the questions set out below, which have been raised for a number of years, have been resolved.

1.  Part V (Old-age benefit), Articles 28 and 29, paragraph 1 (in conjunction with Article 65 or Article 66).  The Committee recalls that the rate of the pensions provided by the private pensions system does not appear to be determined in advance, since it depends on the capital accumulated in individual capitalization accounts, and particularly on the earnings from these accounts. The Committee takes note of the statistical data provided by the Government in September 1998 on the pensions adjustment factor and the monthly average pension per member; these data are not, however, sufficient to allow the Committee to assess the effect given to the Convention. The Committee once again recalls that, under Article 29, paragraph 1, read in conjunction with Articles 28 and 65 or 66, an average benefit at least equal to 40 per cent of the reference wage has to be secured to a person protected who has completed, prior to the contingency, in accordance with prescribed rules, a qualifying period which may be 30 years of contribution. The Committee would therefore be grateful if the Government would provide statistical data as requested in the report form, such as to allow it to make a full evaluation of the extent to which the old-age benefit, in all cases and irrespective of the type of system selected, attains the level prescribed by the Convention.

The Committee takes note of the seventh and final provision of Supreme Decree No. 054-97-EF which provides that the requirements and conditions such as to allow the private pensions system to guarantee a minimum retirement pension for its members shall be established by a Supreme Decree approved by the Ministry of Economics and Finance. The Committee recalls in this regard that Article 66 of the Convention can be applied within the framework of a private pensions system provided that the minimum old-age benefits payable to a standard beneficiary with 30 years of contribution are not less than the minimum amount required by the Convention (40 per cent of the wages of an ordinary adult male unskilled labourer within the meaning of paragraphs 4 and 5 of this Article). The Committee would therefore be grateful if the Government in its next report would provide a copy of the Supreme Decree adopted in implementation of the abovementioned final provision of Supreme Decree No. 954-97-EF, as well as statistical information required by the report form.

2.  Article 30.  The Committee again requests the Government to indicate the measures adopted or envisaged to guarantee the full application of this provision of the Convention (payment of the benefit throughout the contingency) with regard to the "programmed retirement" system, under which monthly withdrawals may be made from the account until the accumulated capital is exhausted, contrary to the above Article. In this regard, the Committee also refers to its comments on the application of Article 4 of the Old-Age Insurance (Industry, etc.) Convention, 1933 (No. 35).

3.  Part IX (Invalidity benefit), Article 58.  The Committee again requests the Government to indicate how full effect is given to this provision of the Convention (provision of the benefit throughout the contingency or until an old-age benefit becomes payable) in the event of the permanent total invalidity of a worker who has selected the "programmed retirement" system.

4.  Part XIII (Common provisions), Article 71, paragraph 1.  The Committee notes that the cost of the benefits, certain administrative expenses and certain commissions are paid entirely by the worker who is insured under an AFP. Employers’ contributions appear to be of a voluntary nature. According to Article 71, paragraph 1, "the cost of the benefits provided ... and the cost of the administration of such benefits should be borne collectively by way of insurance contributions or taxation or both in a manner which avoids hardship to persons of small means and takes into account the economic situation of the member and of the classes of the persons protected". The Committee once again requests the Government to indicate the measures which have been adopted or envisaged to give full effect to the Convention in this respect.

5.  Article 71, paragraph 2.  The Committee again recalls that, under this provision of the Convention, the total of the insurance contributions borne by the employees protected shall not exceed 50 per cent of the total of the financial resources allocated to the protection of employees and their spouses and children. In order to be in a position to assess the effect given to this provision of the Convention, the Committee again requests the Government to provide in its next report the statistics requested in the report form under this Article of the Convention for both the private pensions and health systems and the schemes administered by the public system.

II.  System of pensions administered by the ONP

The Committee again draws the Government’s attention to the following specific points.

1.  Part V (Old-age benefit), Article 29, paragraph 2(a).  In the report received in September 1998, the Government acknowledges that Peruvian law does not envisage a case of the kind described in this provision. The Committee recalls that Article 29, paragraph 2(a), provides that, where the old-age benefit is conditional upon a minimum period of contribution, a reduced benefit shall be secured to any insured person who has completed a qualifying period of 15 years of contribution or employment. The Committee again points out that the qualifying period laid down in the legislation is higher than the 15-year period established in the Convention. In these circumstances, the Committee can only ask the Government once again to take the necessary measures to ensure that persons protected are entitled to a reduced benefit after 15 years of contribution, as provided by this provision of the Convention.

2.  Part XI (Calculation of periodical payments), Articles 65 and 66.  The Committee notes the declaration of the Government according to which the maximum amount of the old-age pension paid by the National Pensions System is insufficient and is not proportionate to the workers’ contributions. It also notes that, as of 1 January 1997, contributions to the National Pensions System will be not less than 13 per cent of the total insurable income of each worker. In addition, a National Public Savings Fund has been established, profits from which will be used to pay benefits to pensioners whose total monthly pensions do not exceed 1,000 new soles. The Committee hopes that the Government will be able to go on providing information on the measures taken or envisaged to increase the pensions paid by the National Pensions System so as to reach the level prescribed by the Convention. The Committee further requests the Government to provide all statistics required by the report from under Article 65 or 66, including statistics on the review of long-term benefits to take account of changes in the cost of living. The Committee again recalls the importance that it attaches to the revision of the rates of current periodical payments in the case of long-term benefits, as required by Article 65, paragraph 10, and Article 66, paragraph 8.

III.  Supervision of the private and public pensions systems

In its report, received in September 1998, the Government indicates that the State assumes overall responsibility for matters relating to the provision of benefits and takes any measures required for this purpose and for ensuring sound administration of institutions and services involved in implementing the Convention. The Committee would be grateful if the Government would indicate the specific measures adopted to apply Article 71, paragraph 3, and Article 72, paragraph 2, with regard both to the private and public pensions systems. In this context, the Committee recalls the importance of the regular actuarial studies and calculations required by Article 71, paragraph 3.

As regards the private system, the Committee takes note of the fact that, in accordance with section 23 of Supreme Decree No. 054-97-EF, investments made by the AFP are required to generate a certain minimum level of profits. Moreover the Government is responsible for determining criteria of minimum profitability (guaranteed by the statutory reserve formed from the AFP’s own funds and other sources). The Committee would be grateful if the Government would also indicate in its next report all the measures taken to ensure the minimum level of profits generated by the AFP for its members and provide a copy of the Supreme Decree approved by the Minister of Economics and Finance.

IV.  Participation of persons protected in the administration of the system

1.  The Committee again requests the Government to indicate the measures which have been taken or are envisaged, in the context of the Private Pensions System, to give effect to Article 72, paragraph 1, of the Convention, according to which, where the administration is not entrusted to an institution regulated by the public authorities or to a government department responsible to the legislature, representatives of the persons protected shall participate in or be associated with the management, in a consultative capacity, under prescribed conditions. In this context, the Committee refers to information supplied by the Government in its report on the application of Convention No. 35, and trusts that the Government will indicate any new measures taken to allow the participation by the persons protected in the administration of the Private Pensions System.

2.  The Committee requests the Government to indicate the manner in which representatives of the persons protected participate in the management of the pensions system administered by the ONP, and in particular whether they are represented on the management bodies of the ONP.

V.  The Committee recalls the observations received from the Association of Retired Oil Industry Workers of the Metropolitan Area of Lima and Callao and notes the Government’s statement to the effect that no authority can take up cases that are still before the courts or interfere with the work of the courts. The Committee refers to its previous comments and trusts that the Government will in due course provide copies of any final judicial decisions on cases brought in connection with the observations made by the Association of Retired Oil Industry Workers of the Metropolitan Area of Lima and Callao.

VI.  While fully aware of the complexity of the issues raised, the Committee trusts that the Government, if it deems appropriate, will seek advice and assistance from the competent services of the Office on the organization and working of the public and private social security systems in the area of health care. The Committee trusts the Government will redouble its efforts to provide the information requested in the present observation and in the direct requests for 1997 and 1998.

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I. Health care system. With reference to its observation, the Committee would like to receive detailed information on the following points.

Part II (Medical care), Article 7 of the Convention. Act No. 26790 to modernize social security in the area of health, and Supreme Decree No. 009-97-SA provide that benefits for prevention and health promotion are a priority and their purpose is to maintain the health of the population. In addition, compulsory preventive benefits are provided under preventive promotional programmes run by the Peruvian Social Security Institute (IPSS) and private companies, on the basis of their own services or those provided by health care providers (EPS) (section 9 of the Act and sections 11 and 19 of the Supreme Decree). The Committee requests the Government to provide detailed information on the implementation of these provisions.

Article 10, paragraph 2. Section 42(1) of the above Supreme Decree provides that participation of insured persons in the costs of medical care may not exceed 2 per cent of their monthly income in the case of outpatient treatment or 10 per cent in the case of hospitalization, unless the worker expressly consents to a higher charge when the vote is taken at the enterprise on the choice of health care provider and health care plan. In addition, under section 42(3) of the Supreme Decree, the worker's contribution to the cost of treatment, whether outpatient or inpatient, may not exceed 10 per cent. The Committee requests the Government to indicate whether the maximum amount specified in section 42(3) can also be exceeded with the member's consent.

Article 12. The Committee hopes that the Government will indicate in its next report the period during which medical benefits must be provided and indicate the relevant provisions.

Part XIII (Common provisions) (in conjunction with Parts II, III and VIII), Article 69. The Committee would be grateful if the Government would provide copies of any legal or regulatory texts providing for the possibility of suspending medical or cash sickness and maternity benefits. Please provide in particular a copy of the text governing the conditions and procedures which must be adopted by the IPSS to implement section 15 of Supreme Decree No. 009-97-SA.

Article 70. Please provide a copy of the regulations adopted by the Supervisory Board of the health care providers to implement section 91 of Supreme Decree No. 009-97-SA which provides that the settlement of disputes through arbitration, the provisions which also apply to persons affiliated to health care providers (EPS) and to persons who receive health care benefits provided by the employer. The Committee also requests the Government to indicate whether decisions made by arbitration bodies can be challenged in court. Lastly the Committee would be grateful if the Government would indicate whether disputes between the beneficiaries of health care benefits and the IPSS are also subject to arbitration, given that this is not explicitly clear from section 91.

Part XIV (Miscellaneous provisions) (in conjunction with Parts II, III and VIII). (a) Article 76. Please provide statistical data on the coverage of medical care and the sickness and maternity benefits required under Article 76, paragraph 1(b)(i), in the form required by the report form under this Article of the Convention.

(b) Please provide statistical data, as requested in Article 76, paragraph 1(b)(ii) in conjunction with Article 65, concerning the amount of cash benefits for sickness and maternity, in the form required by the report form under Article 65. Please also indicate whether a maximum amount is fixed, either for sickness and maternity benefits or for the wages on which the calculation of the benefits is based.

Lastly, the Committee requests the Government to indicate whether section 52(2) of Supreme Decree No. 009-97-SA, according to which workers may once per year decide individually to transfer from the IPSS to a health care provider (EPS) and vice versa, also applies to the case of new workers referred to in section 53 of the same Supreme Decree.

II. The Committee hopes that the Government's next report will contain detailed information in reply to the points raised in its direct request of 1997 concerning the private pensions system.

[The Government is requested to report in detail in 2000.]

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Health care scheme

In its previous comments, the Committee had requested the Government to provide detailed information on the implementation of the new health care system following the adoption of Act No. 26790 to modernize social security in the area of health and of its implementing regulations in Supreme Decree No. 009-97-SA, which entered into force in 1997. The Committee had therefore asked the Government to provide a detailed report giving information on the legislation and the practice with regard to each provision of the Convention. In its report, the Government indicates that, in view of the recent publication of this new legislation, it is unable at this stage to provide information on the implementation of the new system. Moreover, in its report on the Sickness Insurance (Industry) Convention, 1927 (No. 24), the Government sets out a number of general observations. The Committee notes this information and the adoption of Supreme Decree No. 001-98-SA, a copy of which is provided by the Government. The Committee also notes the observations made on 22 May 1998 by the Single Trade Union of Technicians and Specialist Auxiliary Staff of the Peruvian Social Security Institute alleging among other things that the purpose of Act No. 26790 and its implementing regulations is to dismantle social security and the Peruvian Social Security Institute (IPSS) by placing them in the hands of private individuals and foreign capital. In its reply, the Government denies this allegation and emphasizes that it has no intention of privatizing social security in the country, and that the IPSS should be regarded as administering the general scheme and the health care providers (EPS) as an option available to workers.

The Committee recalls that Act No. 26790 to modernize social security in the area of health and Supreme Decree No. 009-97-SA provide for the involvement of the private sector in the area of health care. The health care services provided by the IPSS are complemented by the health care plans and programmes of the health care providers (EPS). The latter can be public or private enterprises or institutions independent of the IPSS whose sole purpose is to provide health care services through their own infrastructure or third-party facilities. In this new system, workers who are members of private health care programmes will receive cash medical benefits from the IPSS in the event of serious illness and from their health care provider (or their employer's own health care services) for routine ailments. Employers providing health care, either through an EPS or through their own services, are given a credit for the amount of their contributions to the IPSS (sections 15 and 16 of the Act). The Act in principle guarantees that workers may freely choose whether to join the IPSS or an EPS (section 15 of Act No. 26790 and sections 46, 50, 51 and 52 of Supreme Decree No. 009-97-SA).

Given the fundamental changes made by the new legislation in the area of health care, the Committee once again expresses the hope that the Government will provide detailed information in its next report on the legislation and the practice with regard to each of the Articles of the Convention, in accordance with the report form. While awaiting this information, the Committee wishes to draw the Government's attention to the following points.

Part II (Medical care), Article 10 of the Convention (in conjunction with Article 8). Section 12 of Supreme Decree No. 009-97-SA specifies that curative medical care must include both out-patient and hospital in-patient medical care, medication, prostheses, necessary orthopaedic appliances and rehabilitative services. As regards maternity benefits, they should cover care during pregnancy, confinement and the postnatal period. Under section 9 of Act No. 26790 and sections 11 and 20 of the above Supreme Decree, the benefits provided may not be inferior in scope to the minimum health plan set out in Annex 2 of the Supreme Decree, read in conjunction with Annex 3. Care comes under either simple cover (capa simple) or complex cover (capa compleja). Simple cover includes the most frequent and least complex types of medical treatment and is described in Annex 1 of the Supreme Decree. This simple cover is paid for either by the IPSS or by enterprises, through their own services or through health care plans contracted with an EPS. Complex cover is provided by the IPSS (section 34 of the Supreme Decree). Moreover section 90 of the Supreme Decree describes how in practice the responsibilities are to be apportioned between the EPS and the IPSS.

The Committee hopes that the Government will provide detailed information on the implementation of the above-mentioned provisions of the Act and of the Supreme Decree so as to allow it better to assess the application in practice of Article 8 of the Convention, according to which contingencies covered must include any morbid condition, and Article 10 of the Convention, which specifies the nature of medical benefits which must be provided. In this regard, the Committee also hopes that the Government will indicate which provisions govern the domiciliary visits by general medical practitioners provided for in Article 10, paragraph 1(a)(i). Finally, the Committee hopes that the Government will provide with its next report examples of insurance policies concluded with an EPS, and specimens of membership forms.

Part II (Medical care), Article 9, Part III (Sickness benefit), Article 15, and Part VIII (Maternity benefit), Article 48. The Committee hopes that the Government will provide detailed information on the geographical coverage of the new health care system in respect both of the IPSS and of the EPS, and indicate the regions in which the EPS have not yet been established.

Part XIII (Common provisions) (in conjunction with Parts II, III and VIII), Article 71. The Committee notes the establishment of the Superintending Board of health care providers (SEPS) which is responsible for authorizing, regulating and supervising the activities of the EPS and for ensuring the correct use of the funds managed by those bodies (section 2(d) of the aforementioned Supreme Decree). The SEPS is a decentralized public health body financed by levies from the bodies subordinate to it. The Committee hopes that the Government will provide detailed information on the manner in which the SEPS carries out supervision in practice, including copies of any inspection reports or other relevant official documents. In this regard, the Committee notes that, under section 2 of the Act, and sections 2(a) and 3 of the Regulations, the IPSS is responsible for administering social security in the field of health care. The Committee would like the Government to clarify the manner in which the IPSS carries out this mandate, in particular with regard to the EPS.

The Committee also hopes that the Government will indicate whether, when the new system of social security in the field of health was established, any actuarial studies were undertaken into the financial viability of the participant bodies, in particular the IPSS which will continue to bear responsibility for the longer-term and more complex cases of illness. If such studies were carried out, the Committee requests the Government to provide copies of any such studies. Studies of this kind appear to be all the more necessary given that enterprises which provide health care through the intermediary of the EPS or through their own services are entitled to a credit for workers' contributions equal in principle to 25 per cent of those contributions (sections 15 and 16 of the Act). The Committee hopes further that the Government will provide information on the manner in which the controlling authority will supervise the implementation in practice of the minimum health care plans, both by the EPS and employers' own health care services.

Article 72. The Committee hopes that the Government will provide detailed information on the participation of protected persons in the administration of the system, particularly in the EPS and employers' health care services. It also hopes that the Government will indicate whether persons protected are represented on the management boards of the SEPS.

Pensions scheme

I. Private pensions system

The Committee takes note of the Government's reports. It also notes the adoption of Supreme Decree No. 054-97-EF of 13 May 1997 approving the single ordained text of the Act respecting the private system of administration of pension funds. In its report the Government reiterates that the private pensions system cannot be examined within the scope of Convention No. 102. The Government refers to the conclusions of the Conference Committee on the Application of Standards, which in June 1997 agreed that the coexistence within the social security system of both a public and a private scheme, as has been the case in Peru since 1992, is not in itself incompatible with the Convention, since the Convention allows the minimum level of social security to be maintained through various methods. The Government also draws attention to the flexibility of Convention No. 102, which allows various approaches to attaining the same level of social security in order to take into account the wide range of national solutions and the rapid and constant developments in systems of protection. The Government points out that the national pensions system and the private pensions system were designed to coexist.

The Government indicates that workers entering the Peruvian labour market for the first time have, in principle, the option of joining one or other of the systems. However, the Committee notes that, in the event a worker who has not subscribed to the private pensions system starts work, the employer is obliged to sign him up with the Pension Fund Administrator (AFP) of his choice, unless the worker indicates in writing within ten days that he wishes to join or remain in the National Pensions System (section 6(2) of Supreme Decree No. 054-97-EF). The Committee once again recalls that workers registered with an AFP can no longer rejoin the system administered by the Insurance Standardization Office (ONP). The Committee therefore considers that, in practice, the private pensions system which coexists with the public system may eventually replace it.

The Committee agrees that Convention No. 102 was conceived in a highly flexible manner and that it is possible to achieve the same level of social security through different approaches, the Conference having deliberately refused to adopt a rigid terminology. Nevertheless, the Convention embodies certain principles of general applicability for the organization and functioning of social security systems (Articles 71 and 72 of the Convention). In order to allow it to assess how effect is given to these principles and to other provisions of the Convention, the Committee again urges the Government to indicate in its next report how the questions set out below, which have been raised for a number of years, have been resolved.

1. Part V (Old-age benefit), Articles 28 and 29, paragraph 1 (in conjunction with Article 65 or Article 66). The Committee recalls that the rate of the pensions provided by the private pensions system does not appear to be determined in advance, since it depends on the capital accumulated in individual capitalization accounts, and particularly on the earnings from these accounts. The Committee takes note of the statistical data provided by the Government in September 1998 on the pensions adjustment factor and the monthly average pension per member; this data are not, however, sufficient to allow the Committee to assess the effect given to the Convention. The Committee once again recalls that, under Article 29, paragraph 1, read in conjunction with Articles 28 and 65 or 66, an average benefit at least equal to 40 per cent of the reference wage has to be secured to a person protected who has completed, prior to the contingency, in accordance with prescribed rules, a qualifying period which may be 30 years of contribution. The Committee would therefore be grateful if the Government would provide statistical data as requested in the report form, such as to allow it to make a full evaluation of the extent to which the old-age benefit, in all cases and irrespective of the type of system selected, attains the level prescribed by the Convention.

The Committee takes note of the seventh and final provision of Supreme Decree No. 054-97-EF which provides that the requirements and conditions such as to allow the private pensions system to guarantee a minimum retirement pension for its members shall be established by a Supreme Decree approved by the Ministry of Economics and Finance. The Committee recalls in this regard that Article 66 of the Convention can be applied within the framework of a private pensions system provided that the minimum old-age benefits payable to a standard beneficiary with 30 years of contribution are not less than the minimum amount required by the Convention (40 per cent of the wages of an ordinary adult male unskilled labourer within the meaning of paragraphs 4 and 5 of this Article). The Committee would therefore be grateful if the Government in its next report would provide a copy of the Supreme Decree adopted in implementation of the above-mentioned final provision of Supreme Decree No. 954-97-EF, as well as statistical information required by the report form.

2. Article 30. The Committee again requests the Government to indicate the measures adopted or envisaged to guarantee the full application of this provision of the Convention (payment of the benefit throughout the contingency) with regard to the "programmed retirement" system, under which monthly withdrawals may be made from the account until the accumulated capital is exhausted, contrary to the above Article. In this regard, the Committee also refers to its comments on the application of Article 4 of the Old-Age Insurance (Industry, etc.) Convention, 1933 (No. 35).

3. Part IX (Invalidity benefit), Article 58. The Committee again requests the Government to indicate how full effect is given to this provision of the Convention (provision of the benefit throughout the contingency or until an old-age benefit becomes payable) in the event of the permanent total invalidity of a worker who has selected the "programmed retirement" system.

4. Part XIII (Common provisions), Article 71, paragraph 1. The Committee notes that the cost of the benefits, certain administrative expenses and certain commissions are paid entirely by the worker who is insured under an AFP. Employers' contributions appear to be of a voluntary nature. According to Article 71, paragraph 1, "the cost of the benefits provided ... and the cost of the administration of such benefits should be borne collectively by way of insurance contributions or taxation or both in a manner which avoids hardship to persons of small means and takes into account the economic situation of the member and of the classes of the persons protected". The Committee once again requests the Government to indicate the measures which have been adopted or envisaged to give full effect to the Convention in this respect.

5. Article 71, paragraph 2. The Committee again recalls that, under this provision of the Convention, the total of the insurance contributions borne by the employees protected shall not exceed 50 per cent of the total of the financial resources allocated to the protection of employees and their spouses and children. In order to be in a position to assess the effect given to this provision of the Convention, the Committee again requests the Government to provide in its next report the statistics requested in the report form under this Article of the Convention for both the private pensions and health systems and the schemes administered by the public system.

II. System of pensions administered by the ONP

The Committee again draws the Government's attention to the following specific points.

1. Part V (Old-age benefit), Article 29, paragraph 2(a). In the report received in September 1998, the Government acknowledges that Peruvian law does not envisage a case of the kind described in this provision. The Committee recalls that Article 29, paragraph 2(a), provides that, where the old-age benefit is conditional upon a minimum period of contribution, a reduced benefit shall be secured to any insured person who has completed a qualifying period of 15 years of contribution or employment. The Committee again points out that the qualifying period laid down in the legislation is higher than the 15-year period established in the Convention. In these circumstances, the Committee can only ask the Government once again to take the necessary measures to ensure that persons protected are entitled to a reduced benefit after 15 years of contribution, as provided by this provision of the Convention.

2. Part XI (Calculation of periodical payments), Articles 65 and 66. The Committee notes the declaration of the Government according to which the maximum amount of the old-age pension paid by the National Pensions System is insufficient and is not proportionate to the workers' contributions. It also notes that, as of 1 January 1997, contributions to the National Pensions System will be not less than 13 per cent of the total insurable income of each worker. In addition, a National Public Savings Fund has been established, profits from which will be used to pay benefits to pensioners whose total monthly pensions do not exceed 1,000 new soles. The Committee hopes that the Government will be able to go on providing information on the measures taken or envisaged to increase the pensions paid by the National Pensions System so as to reach the level prescribed by the Convention. The Committee further requests the Government to provide all statistics required by the report from under Article 65 or 66, including statistics on the review of long-term benefits to take account of changes in the cost of living. The Committee again recalls the importance that it attaches to the revision of the rates of current periodical payments in the case of long-term benefits, as required by Article 65, paragraph 10, and Article 66, paragraph 8.

III. Supervision of the private and public pensions systems

In its report, received in September 1998, the Government indicates that the State assumes overall responsibility for matters relating to the provision of benefits and takes any measures required for this purpose and for ensuring sound administration of institutions and services involved in implementing the Convention. The Committee would be grateful if the Government would indicate the specific measures adopted to apply Article 71, paragraph 3, and Article 72, paragraph 2, with regard both to the private and public pensions systems. In this context, the Committee recalls the importance of the regular actuarial studies and calculations required by Article 71, paragraph 3.

As regards the private system, the Committee takes note of the fact that, in accordance with section 23 of Supreme Decree No. 054-97-EF, investments made by the AFP are required to generate a certain minimum level of profits. Moreover the Government is responsible for determining criteria of minimum profitability (guaranteed by the statutory reserve formed from the AFP's own funds and other sources). The Committee would be grateful if the Government would also indicate in its next report all the measures taken to ensure the minimum level of profits generated by the AFP for its members and provide a copy of the Supreme Decree approved by the Minister of Economics and Finance.

IV. Participation of persons protected in the administration of the system

1. The Committee again requests the Government to indicate the measures which have been taken or are envisaged, in the context of the Private Pensions System, to give effect to Article 72, paragraph 1, of the Convention, according to which, where the administration is not entrusted to an institution regulated by the public authorities or to a government department responsible to the legislature, representatives of the persons protected shall participate in or be associated with the management, in a consultative capacity, under prescribed conditions. In this context, the Committee refers to information supplied by the Government in its report on the application of Convention No. 35, and trusts that the Government will indicate any new measures taken to allow the participation by the persons protected in the administration of the Private Pensions System.

2. The Committee requests the Government to indicate the manner in which representatives of the persons protected participate in the management of the pensions system administered by the ONP, and in particular whether they are represented on the management bodies of the ONP.

V. The Committee recalls the observations received from the Association of Retired Oil Industry Workers of the Metropolitan Area of Lima and Callao and notes the Government's statement to the effect that no authority can take up cases that are still before the courts or interfere with the work of the courts. The Committee refers to its previous comments and trusts that the Government will in due course provide copies of any final judicial decisions on cases brought in connection with the observations made by the Association of Retired Oil Industry Workers of the Metropolitan Area of Lima and Callao.

VI. While fully aware of the complexity of the issues raised, the Committee trusts that the Government, if it deems appropriate, will seek advice and assistance from the competent services of the Office on the organization and working of the public and private social security systems in the area of health care. The Committee trusts the Government will redouble its efforts to provide the information requested in the present observation and in the direct requests for 1997 and 1998.

[The Government is asked to report in detail in 2000.]

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The Committee notes that the Government's report again omits the information requested in the direct request of February-March 1995. It therefore hopes that in its next report the Government will supply information on:

Private pension scheme

1. Part IX (Invalidity benefit), Article 56 and Article 57, paragraph 1, of the Convention (in relation with Article 65). (a) In accordance with section 100 of Presidential Decree No. 206-92-EF to issue the regulations respecting the private pension system of 6 December 1992 and sections 65 and 66 of Decision No. 141-93-EF/SAFP of 27 August 1993, pensions for total permanent invalidity are equivalent to 70 per cent of monthly remuneration, which may not exceed a maximum level adjusted according to the consumer price index. Furthermore, in accordance with section 112 of the above Presidential Decree No. 206, in the event of permanent total invalidity, insured workers may either (a) avail themselves of the early pension system referred to section 40 of Legislative Decree No. 25897 of 27 November 1992, or (b) select the pension modalities established in section 42 of the above Legislative Decree. Lastly, under the terms of section 117 of Presidential Decree No. 206-92-EF/SAFP, up to 20 per cent of the costs of the medical examinations and procedures required to qualify for invalidity benefit are at the expense of the worker.

The Committee requests the Government to indicate in its next report, on the basis of detailed statistics, whether the amount of invalidity benefit, irrespective of the type of pension chosen and the cost of the examination and procedures set out in section 117, attains the percentage established by the Convention (40 per cent) for a standard beneficiary (with a wife and two children) whose wage is equal to the wage of a skilled manual male employee.

(b) Please also specify the level of the benefit provided to an invalid who, after becoming an invalid, reaches the age of entitlement to a pension established under section 39 of Legislative Decree No. 25897 of 27 November 1992 (see section 115 of Presidential Decree No. 206-92-EF).

2. Part XI (Standards to be complied with by periodical payments), Article 65, paragraph 10. The Committee notes that, under sections 37, 46(e) and 51(a) of Decision No. 141-93-EF/SAFP of 27 August 1993, family and personal lifetime annuities, as well as temporary annuities with deferred retirement benefits are adjusted on a monthly basis as a function of the consumer price index in the city of Lima, which is prepared by the National Statistical Institute, or according to any indicator which may replace it. The Committee requests the Government to provide in its next report all the statistical information requested in the report form under Article 65, Title VI.

3. Part XIII (Common provisions) Article 70. Please indicate the rules governing the right of appeal of insured persons in case of the refusal of the benefit or complaint as to its quantity.

4. Articles 71, paragraph 3 (responsibility for the provision of benefits), and 72, paragraph 2 (general responsibility for the proper administration of the system). Please provide information on the practical measures taken to give full effect to these provisions of the Convention.

5. Lastly, the Committee would be grateful if the Government would provide the full text of the Compendium of Supervisory Standards, which governs the system of pension fund administrations, and of all other provisions pertaining to this matter.

[The Government is asked to report in detail in 1998.]

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I. 1. The Committee notes the discussion that took place in the Committee on the Application of Standards at the 85th Session of the Conference (June 1997), and the Government's report received in October 1997. In its report the Government states that the Private Pensions System cannot be examined within the scope of Convention No. 102. The Convention was based on a public social security system which was the only type that existed in 1952 when the Convention was adopted. On registering ratification of the Convention in 1961, the Peruvian State accepted certain parts of the Convention and availed itself of the temporary exceptions allowed by some of its Articles. The Government also submits that the Private Pensions System introduced in 1992 is not subject to observations under Convention No. 102 since it is an alternative and different system to the one provided for in the Convention. In his statement to the Conference Committee, the Government representative held that the Private Pensions System, in view of its principles and basic characteristics, cannot be understood or analysed within the scope of the Convention.

2. In its conclusion, the Conference Committee shared the opinion that the coexistence in the social security system of both a public and a private scheme, as has been the case in Peru since 1992, is not in itself incompatible with the Convention, which allows the minimum level of social security to be attained through various methods. The Committee shared the concern that the minimum levels of benefit for retirement and invalidity guaranteed by the Convention might not be guaranteed by either the public or the private social security system, though for different reasons.

3. In view of the foregoing, the Committee considers it appropriate to reiterate the terms of its observation of 1996 in which it recalled that, as illustrated in its General Surveys of 1961 and 1989, Convention No. 102 was conceived in a highly flexible manner. It is possible to achieve the same level of social security through various approaches. The Conference deliberately refused to adopt a rigid terminology which would have been ill-suited to the particularly wide range of national solutions, still less to the rapid and constant developments in systems of protection (paragraph 41 of the General Survey of 1989). Nevertheless, the Convention sets forth a number of practical criteria of general applicability for the organization and functioning of social security systems (Articles 71 and 72).

4. Furthermore, the Committee asks the Government to respond to the following points which it already raised in its previous comments. Workers entering the Peruvian labour market for the first time have, in theory, the option of joining one or other of the systems. However, once they have registered with a private pension fund administrator, they can no longer rejoin the system administered by the Insurance Standardization Office (ONP). The Private Pensions System which currently coexists with the public system may end up replacing it. The benefits provided to workers under the Private Pensions System include retirement and invalidity benefits, which are covered by Parts V and IX of the Convention, which have been accepted by Peru.

II. During the discussion in the Conference Committee in June 1997, the Government representative cited the Government's earlier statements to the effect that the maximum amount paid in retirement benefits under the public pensions system was absolutely insufficient and retained no relation to the worker's contributions. The Government representative submitted that the implementation of the Private Pensions System had brought many benefits to the country as a whole, since the savings it had produced had been invested in a number of projects which generated new jobs. He added that according to studies conducted in Peru, it could be predicted that persons affiliated to the Private Pensions System would receive significantly better pensions than those provided by the public system. The Committee asks the Government to include copies of the above studies in its next report, since it does not have the necessary statistical information on the Public Pensions System and the Private Pensions System to settle the matters raised in its comments (observation and direct request).

III. The Committee trusts that the Government will be able to provide a response in its next report to the matters pending in connection with the Private Pensions System as it relates to the following provisions of the Convention:

1. Part V (Old-age benefit, Articles 28 and 29, paragraph 1 (in relation to Article 65 or Article 66). The rate of the pensions provided by the Private Pensions System does not appear to be determined in advance, since it depends on the capital accumulated in individual capitalization accounts, and particularly on the earnings from these accounts. The Committee again recalls that, in accordance with Article 29, paragraph 1, in conjunction with Articles 28 and 65, an old-age benefit at least equal to 40 per cent of the reference wage has to be secured to a person protected who has completed, prior to the contingency, in accordance with prescribed rules, a qualifying period which may be 30 years of contribution. The Committee would therefore be grateful if the Government would supply statistical information to enable the Committee to make a full evaluation of the extent to which the old-age benefit, in all cases and irrespective of the type of scheme selected, attains the level prescribed by the Convention. In this connection, the Committee notes that under section 13 of Act No. 26504 of 1995 amending the Health Benefits Scheme, the National Pensions System, the Private Pension Funds System and the structure of contributions to FONAVI, the requirements and conditions were established under which the Private Pensions System could guarantee a minimum pension to its affiliates (resolution No. 484-95-EF/SAFP adopting and amending the Supervisory Standards of the Private System of Pension Fund Administrations, with regard to the award of benefits and the registration of insurance companies). The Committee reminds the Government that it might include information in its next report on the practical effect of the above provisions, in terms of securing to all persons protected who have completed a period of 30 years of contribution a minimum benefit which attains the level prescribed by the Convention (Article 66).

2. Article 30. Please indicate the measures which have been adopted or are envisaged to guarantee the full application of this provision of the Convention (payment of the benefit throughout the contingency) with regard to the "programmed retirement" system, under which monthly withdrawals may be made from the account until the accumulated capital is exhausted, in contradiction with the above Article.

3. Part IX (Invalidity benefit), Article 58. Please indicate how full effect is given to this provision of the Convention (payment of the benefit throughout the contingency or until an old-age benefit becomes payable) in the event of the permanent total invalidity of a worker who has selected the "programmed retirement" system.

4. Part XIII, Article 71, paragraph 1. The Committee notes that the cost of the benefits, certain administrative expenses and certain commissions are paid entirely by the worker who is insured under a Pension Fund Administrator (AFP). Employers' contributions appear to be of a voluntary nature. According to Article 71, paragraph 1, "the cost of the benefits provided (...) and the cost of the administration of such benefits shall be borne collectively by way of insurance contributions or taxation or both in a manner which avoids hardship to persons of small means and takes into account the economic situation of the Member and of the classes of persons protected". The Committee once again requests the Government to indicate the measures which have been adopted or are envisaged to give full effect to the Convention in this respect.

5. Article 71, paragraph 2. The Committee recalls that, under the provisions of the Convention, the total of the insurance contributions borne by the employees protected shall not exceed 50 per cent of the total of the financial resources allocated to the protection of employees and their spouses and children. In order to be in a position to assess the effect given to this provision of the Convention, the Committee again requests the Government to provide in its next report the statistics requested in the report form under this Article of the Convention for both the private pensions and health systems and the schemes administered by the public system.

6. Article 72, paragraph 1. The Committee requests the Government to indicate the measures which have been taken or are envisaged, in the context of the Private Pensions System, to give effect to this provision of the Convention which states that, where the administration is not entrusted to an institution regulated by the public authorities or to a government department responsible to a legislature, representatives of the persons protected shall participate in the management, or be associated with it in a consultative capacity, under prescribed conditions.

IV. System of pensions administered by the ONP. The Committee draws the Government's attention to the following points in particular:

1. Part V (Old-age benefit), Article 29, paragraph 2. In its report the Government again states that Legislative Decree No. 25967 of 1992 provides that a worker who has contributed for a period of not less than 20 full years may obtain an old-age pension. In the Government's opinion, the provision of Article 29, paragraph 2, of the Convention cannot apply to Peru's case since the legislation does not envisage a qualifying period of 30 years of contribution or employment for the benefit, as prescribed in Article 29(1)(a). The Committee again notes these statements and recalls that Article 19, paragraph 1(a), refers to the maximum period of contribution, employment or residence which may be taken into account to determine whether the old-age benefit attains the level prescribed in the schedule annexed to Part XI (40 per cent of the reference wage for a standard beneficiary after a period of 30 years of contribution or employment). Paragraph 2(a) sets out an additional obligation under which, where the old-age benefit is conditional upon a minimum period of contribution, a reduced benefit shall be secured to any insured person who has completed a qualifying period of 15 years of contribution or employment. This obligation must be complied with irrespective of the fact that the period taken into account for the calculation of the pension is lower than 30 years. The Committee points out that the qualifying period laid down in the legislation is higher than the 15 year period established in the Convention. In these circumstances, the Committee again asks the Government to take the necessary measures to ensure that persons protected are entitled to a reduced benefit after 15 years of contribution, as provided by this provision of the Convention.

2. Part XI (Standards to be complied with by periodical payments), Articles 65 and 66. (a) The Committee recalls that in its previous comments it was noted that the periodical payments made by the ONP were of an absolutely insufficient nature. It would therefore ask the Government to indicate in its next report the measures taken to guarantee a level of benefit that is in accordance with the provisions of the Convention in the schedule annexed to Part XI, and to provide statistical information on this subject as required by the report form under Articles 65 and 66 (see also point II of this observation).

(b) With regard to the adjustment of the rates of current periodical payments in respect of old age and invalidity, the Government states in its report that the statistics requested are in the process of being compiled by the competent bodies, and that the information will be sent shortly. The Committee notes the foregoing and recalls that for several years the Government has also referred to the possibility of carrying out an actuarial study of the pension and invalidity schemes administered by the ONP. The Committee trusts that the Government will be able in its next report to provide the statistics required by the report form under Article 65 (Title VI) which are necessary to assess the changes in long-term benefits in comparison with fluctuations in the cost of living. The Committee again recalls the importance that it attaches to the revision of the rates of current periodical payments in the case of these benefits, as required by Articles 65, paragraph 10, and 66, paragraph 8.

V. The Committee once again notes the observations made by the Association of Retired Oil Industry Workers of the Metropolitan Area of Lima and Callao. In its report the Government repeats that it is awaiting the decision of the Judiciary on the action brought under the Constitution by the above-mentioned organization. The Committee trusts that the Government will communicate the final court decisions on these cases.

VI. In view of the foregoing, the Committee asks the Government to ensure the full application of Articles 71, paragraph 3, and 72, paragraph 2. The Committee would recall that, under the terms of Article 71, paragraph 3, the State has to accept general responsibility for the due provision of social security benefits and take all measures required for this purpose, and that in accordance with Article 72, paragraph 2, the State has to accept general responsibility for the proper administration of the institutions and services concerned in the application of the Convention.

VII. Parts II, III and VIII (in conjunction with Parts I, XI, XII and XIII). The Committee notes the information provided by the Government in its report on Convention No. 24 and the adoption of the following new legislation: General Health Act No. 26482 and Act to modernize social security in the area of health, No. 26790 and its implementing regulation, No. 009-97-SA. This legislation establishes health insurance to be funded by the Peruvian Social Security Institute (IPSS) and provides for the participation of the bodies providing health services. The Government states, among other general considerations, that the health services ensured by the social security are complemented by the plans and programmes of these bodies, which include enterprises and institutions of the public or private sector independent of IPSS whose sole purpose is to provide health services based on their own or third party's infrastructure supervised by the superintendency of the bodies providing health services. According to the Government, the objective of these measures is not to privatize social security, but to permit the private sector to become active in this field. Taking into account the important changes introduced by the new legislation, the Committee would like the Government to supply a detailed report containing information on the legislation and practice, together with the necessary statistical data, in respect of each corresponding Article of the Convention, in accordance with the report form.

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The Committee notes that the Government's report received in October 1996 does not contain the information requested in the direct request made in February-March 1995. It therefore expresses the hope that in its next report the Government will supply the following information:

I. Private pension scheme

1. Part IX (Invalidity benefit), Article 56 and Article 57, paragraph 1, of the Convention (in relation with Article 65). (a) In accordance with section 100 of Presidential Decree No. 206-92-EF to issue the regulations respecting the private pension system of 6 December 1992 and sections 65 and 66 of Decision No. 141-93-EF/SAFP of 27 August 1993, pensions for total permanent invalidity are equivalent to 70 per cent of monthly remuneration, which may not exceed a maximum level adjusted according to the consumer price index. Furthermore, in accordance with section 112 of the above Presidential Decree No. 206, in the event of permanent total invalidity, insured workers may either (a) avail themselves of the early pension system referred to section 40 of Legislative Decree No. 25897 of 27 November 1992, or (b) select the pension modalities established in section 42 of the above Legislative Decree. Finally, under the terms of section 114 of Presidential Decree No. 206-92-EF/SAFP, up to 20 per cent of the costs of the medical examinations and procedures required to qualify for invalidity benefit are at the expense of the worker.

The Committee requests the Government to indicate in its next report, on the basis of detailed statistics, whether the amount of invalidity benefit, irrespective of the type of pension chosen and the cost of the examination and procedures set out in section 117, attains the percentage established by the Convention (40 per cent) for a standard beneficiary (with a wife and two children) whose wage is equal to the wage of a skilled manual male employee. Please compile the above statistics in the manner required by the report form on the Convention (Article 65, Titles I and II).

(b) Please also specify the level of the benefit provided to an invalid who, after becoming an invalid, reaches the age of entitlement to a pension established under section 39 of Legislative Decree No. 25897 of 27 November 1992 (see section 115 of Presidential Decree No. 206-92-EF).

2. Part XI (Standards to be complied with by periodical payments), Article 65, paragraph 10. The Committee notes that, under sections 37, 46(e) and 51(a) of Decision No. 141-93-EF/SAFP of 27 August 1993, family and personal lifetime annuities, as well as temporary annuities with deferred retirement benefits are adjusted on a monthly basis as a function of the consumer price index in the city of Lima, which is prepared by the National Statistical Institute, or according to any indicator which may replace it. The Committee requests the Government to provide in its next report all the statistical information requested in the report form under Article 65, Title VI.

Part XIII (Common provisions)

3. Article 70. Please indicate the rules governing the right of appeal of insured persons in case of the refusal of the benefit or complaint as to its quantity.

4. Articles 71, paragraph 3 (responsibility for the provision of benefits), and 72, paragraph 2 (general responsibility for the proper administration of the system). Please provide information on the measures taken in practice to give full effect to these provisions of the Convention.

5. Finally, the Committee would be grateful if the Government would provide the full text of the Compendium of Supervisory Standards, which governs the system of pension fund administrations, and the text of Decision No. 063-93-EF/SAFP, to which reference is made in section 74(a) of Decision No. 141-93-EF/SAFP of 27 August 1993.

II. The public social security scheme

1. Part XI (Standards to complied with by periodical payments). The Committee requests the Government to indicate in its next report, on the basis of detailed statistics, whether the amount of sickness benefit, old-age benefit, maternity benefit and invalidity benefit provided by the Peruvian Social Security Institute attains the percentages established by the Convention for a standard beneficiary. Please compile the above statistics in the manner required by the report form on the Convention under either Article 65 or Article 66 of the instrument.

The Committee also requests the Government to indicate in its next report the maximum insurable remuneration as established under the fifth transitional provision of Act No. 24786 of 14 December 1987.

2. Part XIV (Miscellaneous provisions), Article 76, paragraph 1(i) (in relation with Articles 9(d) and 48(c)) (persons protected by medical care). The Committee requests the Government to: (a) indicate whether the wives and children of protected employees already in practice benefit from the medical care provided for by the Convention, not only in the event of maternity, but also in the case of a morbid condition; and (b) supply the statistics required by the report form under Article 76, Title V.

[The Government is asked to report in detail in 1997.]

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I. With reference to the matters raised by the Committee in its comments in February-March 1995, the Government recalls that there are two social security systems in Peru: the public system, known as the National Pensions System; and the private pensions system. The Government states that it complies with the provisions of Convention No. 102 in establishing a public system and promoting the existence of private and/or mixed institutions. The coexistence of the two systems means that insured workers have access to a just and worthwhile pension and promotes a healthy efficiency and improvement in the benefits provided. It is in this context that the Government adopted Legislative Decree No. 25897 of 1992, establishing the private pensions system. The fundamental characteristics on which the private pensions system is based are free choice, private administration, compulsory savings, individual capital accumulation and the cost-benefit ratio. The Government states that the private pensions system, in view of its principles and basic characteristics, cannot be included or analysed within the scope of Convention No. 102. The Government requests the Committee to revise the provisions of this Convention with a view to including the new concepts that have been adopted recently in various countries throughout the world.

The Committee recalls that, as illustrated in its General Surveys of 1961 and 1989, Convention No. 102 was conceived in a highly flexible manner. It is possible to achieve the same level of social security through various approaches. The Conference deliberately refused to adopt a rigid terminology which would have been ill-suited to the particularly wide range of national solutions, still less to the rapid and constant developments in systems of protection (paragraph 41 of the General Survey of 1989). Nevertheless, the Convention sets forth a number of practical criteria of general applicability for the organization and functioning of social security systems (Articles 71 and 72).

In its observation of February-March 1995, the Committee noted that workers who enter the labour market for the first time in principle have the option of joining one or other of the systems. Nevertheless, once they have registered with a private pension fund administrator, workers can no longer rejoin the system administered by the Insurance Standardization Office (ONP) (previously part of the Peruvian Social Security Institute - IPSS). As a consequence, the private pensions system which currently coexists with the public system may end up replacing it. The benefits provided to workers under the private pensions system include retirement and invalidity benefits, which are covered by Parts V and IX of the Convention, which have been accepted by Peru.

In this connection, the Committee considers it appropriate to recall the discussion held in the Committee on the Application of Standards (June 1996) on other social security Conventions ratified by Peru (Conventions Nos. 35 to 40). On that occasion, a Government representative stated that the maximum amount paid in retirement benefits under the public pensions system was absolutely insufficient and retained no relation to the worker's contributions. Another Government representative stated that after 40 years, it had been demonstrated that the public system in Peru was a real disaster and was collapsing.

Taking into account the above, the Committee trusts that the Government will re-examine its position and will be in a position to supply in its next report the information requested with regard to the matters raised in its observation of February-March 1995 concerning the private pensions system as it relates to the following provisions of the Convention:

Part V (Old-age benefit), Articles 28 and 29, paragraph 1 (in relation to Article 65). The rate of the pensions provided by the private pensions system does not appear to be determined in advance, since it depends on the capital accumulated in individual capitalization accounts, and particularly on the earnings from those accounts. The Committee recalls once again that, in accordance with Article 29, paragraph 1, in conjunction with Articles 28 and 69, an old-age benefit at least equal to 40 per cent of the reference wage has to be secured to a person protected who has completed, prior to the contingency, in accordance with prescribed rules, a qualifying period which may be 30 years of contribution. The Committee would therefore be grateful if the Government would supply the statistics requested in the report form under Article 65 (Titles I and III) in order to enable it to make a full evaluation of the extent to which the old-age benefit, in all cases and irrespective of the type of scheme selected, attains the level prescribed by the Convention.

Article 30. Please indicate the measures which have been adopted or are envisaged to guarantee the full application of this provision of the Convention (payment of the benefit throughout the contingency) with regard to the "programmed retirement" system, under which monthly withdrawals may be made from the account until the accumulated capital is exhausted, in contradiction with the above Article.

Part IX (Invalidity benefit), Article 58. Please indicate how full effect is given to this provision of the Convention (payment of the benefit throughout the contingency or until an old-age benefit becomes payable) in the event of the permanent total invalidity of a worker who has selected the "programmed retirement" system.

Part XIII, Article 71, paragraph 1. The Committee notes that the cost of the benefits, certain administrative expenses and certain commissions are paid entirely by the worker who is insured under a pension fund administrator (AFP). Employers' contributions appear to be of a voluntary nature. According to Article 71, paragraph 1, "the cost of the benefits provided (...) and the cost of the administration of such benefits shall be borne collectively by way of insurance contributions or taxation or both in a manner which avoids hardship to persons of small means and takes into account the economic situation of the Member and of the classes of persons protected". The Committee once again requests the Government to indicate the measures which have been adopted or are envisaged to give full effect to the Convention in this respect.

Article 71, paragraph 2. The Committee recalls that, under the provisions of the Convention, the total of the insurance contributions borne by the employees protected shall not exceed 50 per cent of the total of the financial resources allocated to the protection of employees and their spouses and children. In order to be in a position to assess the effect given to this provision of the Convention, the Committee requests the Government to provide in its next report the statistics requested in the report form under this Article of the Convention for the whole of Peruvian social security for the Parts of the Convention which have been accepted with regard to both the private pensions and health systems (when the private health system comes into force), and the schemes administered by the public scheme.

Article 72, paragraph 1. The Committee requests the Government to indicate the measures which have been taken or are envisaged, in the context of the private pensions system, to give effect to this provision of the Convention which states that, where the administration is not entrusted to an institution regulated by the public authorities or to a government department responsible to a legislature, representatives of the persons protected shall participate in the management, or be associated with it in a consultative capacity, under prescribed conditions.

II. System of pensions administered by the ONP. The Committee notes that, according to the statement by the Government representatives to the Committee on the Application of Standards, the public pensions system is now ineffective and the benefits bear no relation to the contributions made by workers. In these circumstances, the Committee trusts that the Government will be able to indicate in its next report the measures adopted or envisaged to revitalize the public social security system, particularly with regard to pensions, in order to provide a real alternative to private schemes and to guarantee workers and their families protection against the risks of life in accordance with their needs, in conformity with the international standards ratified by Peru. In this respect, it draws the Government's attention to the specific following points:

1. Part V (Old-age benefit), Article 29, paragraph 2. The Government states that Legislative Decree No. 25967 of 1992, provides that no person insured under the national pensions system may obtain the grant of an old-age pension if he is not credited with contributions for a period of no less than 20 full years. In its opinion, Article 29, paragraph 1, provides that the benefit shall be secured to a person protected who has completed, prior to the contingency, a qualifying period which may be 30 years of contribution or employment. With regard to paragraph 2, the Government states that, in its opinion, where the benefit is conditional upon a minimum period of contribution or employment of 30 years, a reduced benefit shall be secured to a person who has completed, prior to the contingency, a qualifying period of 15 years of contribution or employment. The Committee notes this information and recalls that Article 19, paragraph 1(a), refers to the maximum period of contribution, employment or residence which may be taken into account to determine whether the old-age benefit attains the level prescribed in the schedule annexed to Part XI (40 per cent of the reference wage for a standard beneficiary). Paragraph 2(a) sets out an additional obligation, under which, where the old-age benefit is conditional upon a minimum period of contribution, a reduced benefit shall be secured to any insured person who has completed a qualifying period of 15 years of contribution or employment. This obligation must be complied with irrespective of the fact that the period taken into account for the calculation of the pension is lower than 30 years. The Committee once again requests the Government to take the necessary measures to ensure that the persons protected benefit from a reduced benefit after 15 years of contribution, as provided by this provision of the Convention.

2. Part XI (Standards to be complied with by periodical payments), Articles 65 and 66. (a) Taking into account the statement by the Government representatives at the Conference Committee on the Application of Standards, referred to above in this observation, on the absolutely insufficient nature of the periodical payments made by the ONP, the Committee hopes that the Government will be in a position to indicate in its next report the measures which have been taken to guarantee a level of benefit that is in accordance with the provisions of the Convention in the schedule annexed to Part XI.

(b) With regard to the adjustment of the rates of current periodical payments in respect of old-age and invalidity, the Government states that, as the latest census of the population was undertaken in 1994, it is possible to carry out an actuarial study of the pensions and invalidity schemes administered by the ONP. The Committee takes due note of the above and trusts that the Government will be in a position to supply with its next report the statistics required by the report form under Title XI of Article 65, which are necessary to assess the changes in long-term benefits in comparison with fluctuations in the cost of living. The Committee wishes to recall once again the importance that it attaches to the revision of the rates of current periodical payments in the case of these benefits, as required by Article 65, paragraph 10, and Article 66, paragraph 8. Taking into account the statements made by the Government representatives to the Committee on the Application of Standards, the Committee considers that the measures to be adopted by the Government to review the rate of pensions are of particular importance (see also the following point III).

III. The Committee once again notes the observations made by occupational organizations concerning the difficulties arising in the payment of social security benefits due to individuals. The Association of Retired Oil Industry Workers of the Metropolitan Area of Lima and Callao, on 25 October 1995 and 16 September 1996, referred to a government strategy to tarnish the reputation of the national pensions system as much as possible. It states that the financial and economic resources of the IPSS should not be transferred to pension fund administrators. It refers to judicial decisions recording debts by the IPSS to pensioners.

In a communication dated 4 March 1996, the Government made its own comments on the matter and referred to a case before the competent courts in which a decision was pending. The Government states that no authority can comment on matters that are before a judicial body nor interfere in the exercise of its functions. The Committee trusts that the Government will transmit the definitive court decisions pending in the relevant cases and that it will ensure the full application of the relevant provisions of the Convention, and particularly of Article 71, paragraph 3, and Article 72, paragraph 2. The Committee recalls that, under the terms of Article 71, paragraph 3, the State has to accept general responsibility for the due provision of social security benefits and take all measures required for this purpose, and that in accordance with Article 72, paragraph 2, the State has to accept general responsibility for the proper administration of the institutions and services concerned in the application of the Convention.

IV. Parts II, III and VIII (in conjunction with Parts I, XI, XII and XIII). With regard to the conditions for the award and the duration of benefits, the nature of medical care and the level of cash benefits, the Government refers to the information provided in its report on the Sickness Insurance (Industry) Convention, 1927 (No. 24). The Committee refers to the comments that it has made under Convention No. 24 and trusts that the next report for the above Convention, which has been requested for 1997, will contain sufficient information to enable it also to examine the application of the Parts referred to of Convention No. 102.

V. The Committee notes the report of the tripartite Committee set up to examine the representation made by the Latin American Central of Workers (CLAT) under article 24 of the Constitution alleging non-observance of the Convention by Peru, which was adopted by the Governing Body in November 1995 (264th Session).

Taking into account the importance of the points raised, the Committee cannot but insist that the Government adopt as soon as possible the measures required to give effect to the provisions of the Convention. It requests the Government to include in its next report all of the information requested in this observation and the direct request.

[The Government is asked to report in detail in 1997.]

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I. With reference to its observation, the Committee would be grateful if the Government would supply further information in its next report on the private pension system established by Legislative Decree No. 25897 of 27 November 1992, with reference to the following points:

1. Part IX (Invalidity benefit), Article 56 and Article 57, paragraph 1, of the Convention (in relation with Article 65). (a) In accordance with section 100 of Presidential Decree No. 206-92-EF to issue the regulations respecting the private pension system of 6 December 1992 and sections 65 and 66 of Decision No. 141-93-EF/SAFP of 27 August 1993, pensions for total permanent invalidity are equivalent to 70 per cent of monthly remuneration, which may not exceed a maximum level adjusted according to the consumer price index. Furthermore, in accordance with section 112 of the above Presidential Decree No. 206, in the event of permanent total invalidity, insured workers may either (a) avail themselves of the early pension system referred to section 40 of Legislative Decree No. 25897 of 27 November 1992, or (b) select the pension modalities established in section 42 of the above Legislative Decree. Finally, under the terms of section 114 of Presidential Decree No. 206-92-EF/SAFP, up to 20 per cent of the costs of the medical examinations and procedures required to qualify for invalidity benefit are at the expense of the worker.

The Committee requests the Government to indicate in its next report, on the basis of detailed statistics, whether the amount of invalidity benefit, irrespective of the type of pension chosen and the cost of the examination and procedures set out in section 117, attains the percentage established by the Convention (40 per cent) for a standard beneficiary (with a wife and two children) whose wage is equal to the wage of a skilled manual male employee. Please compile the above statistics in the manner required by the report form on the Convention (Article 65, Titles I and II).

(b) Please also specify the level of the benefit provided to an invalid who, after becoming an invalid, reaches the age of entitlement to a pension established under section 39 of Legislative Decree No. 25897 of 27 November 1992 (see section 115 of Presidential Decree No. 206-92-EF).

2. Part XI (Standards to be complied with by periodical payments), Article 65, paragraph 10. The Committee notes that, under sections 37, 46(e) and 51(a) of Decision No. 141-93-EF/SAFP of 27 August 1993, family and personal lifetime annuities, as well as temporary annuities with deferred retirement benefits are adjusted on a monthly basis as a function of the consumer price index in the city of Lima, which is prepared by the National Statistical Institute, or according to any indicator which may replace it. The Committee requests the Government to provide in its next report all the statistical information requested in the report form under Article 65, Title VI.

Part XIII (Common provisions)

3. Article 70. Please indicate the rules governing the right of appeal of insured persons in case of the refusal of the benefit or complaint as to its quantity.

4. Articles 71, paragraph 3 (responsibility for the provision of benefits), and 72, paragraph 2 (general responsibility for the proper administration of the system). Please provide information on the measures taken in practice to give full effect to these provisions of the Convention.

5. Finally, the Committee would be grateful if the Government would provide the full text of the Compendium of Supervisory Standards, which governs the system of pension fund administrations, and the text of Decision No. 063-93-EF/SAFP, to which reference is made in section 74(a) of Decision No. 141-93-EF/SAFP of 27 August 1993.

II. The social security scheme administered by the Peruvian Social Security Institute (IPSS)

1. Part XI (Standards to complied with by periodical payments). The Committee requests the Government to indicate in its next report, on the basis of detailed statistics, whether the amount of sickness benefit, old-age benefit, maternity benefit and invalidity benefit provided by the Peruvian Social Security Institute attains the percentages established by the Convention for a standard beneficiary. Please compile the above statistics in the manner required by the report form on the Convention under either Article 65 or Article 66 of the instrument.

The Committee also requests the Government to indicate in its next report the maximum insurable remuneration as established under the fifth transitional provision of Act No. 24786 of 14 December 1987.

2. Part XIV (Miscellaneous provisions), Article 76, paragraph 1(i) (in relation with Articles 9(d) and 48(c)) (persons protected by medical care). The Committee requests the Government to: (a) indicate whether the wives and children of protected employees already in practice benefit from the medical care provided for by the Convention, not only in the event of maternity, but also in the case of a morbid condition; and (b) supply the statistics required by the report form under Article 76, Title V.

CMNT_TITLE

I. 1. Private pension system. The Committee notes the new legislation establishing a private system for the administration of pension funds (SPP). It has examined in particular Legislative Decree No. 257897 of 27 November 1992 establishing the private system for the administration of pension funds, Presidential Decree No. 206-92-EF issuing the regulations governing the private pension system, dated 6 December 1992, Presidential Decree No. 220-92-EF approving the conditions of service of the Superintendency of Private Administrations of Pension Funds, dated 21 December 1992, and Decision No. 141-93-EF/SAFP of 27 August 1993, as amended, approving Title VII of the Compendium of Superintendent's Standard, which regulates the system of pension fund administrations (AFP) with regard to benefits.

The Committee notes that the national social security pension scheme, administered by the Peruvian Social Security Institute (IPSS), will continue to remain in force for persons who are currently insured by it, unless they opt to become members of the new private pension schemes. It also notes that new arrivals on the labour market theoretically have the option to be covered by either of the above schemes. Once they are insured by a pension fund administration, workers can no longer return to the national IPSS scheme. All persons insured under a pension fund administration of their choice pay a contribution equivalent to 10 per cent of their insurable income, which may not exceed a certain ceiling. There are no compulsory contributions for employers. Once the pension fund administrations have deducted their commissions, they invest the funds and keep a separate account for each worker. Upon retirement, the persons concerned obtain, in exchange for the sums which have been accumulated, a benefit which may take one of the four following forms: a programmed retirement benefit; a personal lifetime annuity; a family lifetime annuity; or a temporary annuity with a deferred lifetime annuity. Workers who are covered by the private pension system may also benefit from invalidity and survivors' benefits, as well as burial expenses.

After analysing the various above texts, the Committee considers that the new private pension system raises a number of questions with regard to the application of the Convention in relation to the following points.

Part V (Old-age benefit), Articles 28 and 29, paragraph 1, of the Convention (in relation to Article 65). In accordance with section 100 of Presidential Decree No. 206-92-EF, of 6 December 1992, all forms of old-age pensions are determined on the basis of the balance of individual capital accumulation accounts. These are established under the terms of section 19 of Legislative Decree No. 25897 of 27 November 1992, in particular from: the compulsory and voluntary contributions made by insured persons; the voluntary contributions made by employers; the actual value of attributed periods of contribution; capital gains and other earnings from the balance in individual capital accumulation accounts; the amounts of invalidity and death benefits. In exchange for these services, pension fund administrations earn a commission (section 24 of the above Legislative Decree).

The rate of the pensions provided is not therefore determined in advance, since it depends on the capital accumulated in individual accounts, and particularly on the earnings from those accounts. In this respect, the Committee recalls that, in accordance with Article 29, paragraph 1, in conjunction with Articles 28 and 69 of the Convention, an old-age benefit at least equal to 40 per cent of the reference wage has to be secured to a person protected who has completed, prior to the contingency in accordance with prescribed rules, a qualifying period which may be 30 years of contribution.

The Committee therefore requests the Government to provide the statistics requested under Article 65 (Titles I and III) of the report form adopted by the Governing Body in order to enable it to make a full evaluation of the extent to which the old-age benefit, in all cases and irrespective of the type of benefit selected, attains the level prescribed by the Convention.

Article 30. The Committee notes that under the terms of sections 42 and 43 of Legislative Decree No. 25897 of 27 November 1992, workers insured under the private pension system may opt to receive their pension in the form of a "programmed retirement", under which they may make monthly withdrawals until the exhaustion of the capital accumulated in their account. In view of the fact that, in accordance with Article 30 of the Convention, the benefit has to be granted throughout the contingency, the Committee hopes 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.

Part IX (Invalidity benefit), Article 58. The Committee notes that, by virtue of section 112 of Presidential Decree No. 206-92-EF, dated 6 December 1992, in the event of permanent total invalidity, workers may opt to benefit from the system of early retirement established under section 40 of Legislative Decree No. 25897, or for the form of pension established under section 42. Since the programmed retirement, as provided for in section 43 of the above Legislative Decree, is included among these forms of benefit, the Committee refers to its comments under Article 30.

Part XIII (Common provisions), Article 71, paragraph 1. The Committee notes that the cost of the benefits and certain administrative expenses in the context of the private pensions system are at the expense of the individual capital accumulation account of workers insured under the pension fund administration of their choice. Furthermore, certain commissions have to be paid directly by the worker concerned. The only contributions which are compulsory are those of workers to their individual account (composed principally of a contribution equivalent to 10 per cent of the insurable remuneration), while employers only contribute on a voluntary basis (see, among others, sections 24, 30, 31 and 32 of Legislative Decree No. 25897 of 27 November 1992, and sections 97 and 100 of Presidential Decree No. 206-92-EF of 6 December 1992). The Committee recalls in this respect that, in accordance with Article 71, paragraph 1, of the Convention, "the cost of the benefits ... and the cost of the administration of such benefits shall be borne collectively by way of insurance contributions or taxation or both in a manner which avoids hardship to persons of small means and takes into account the economic situation of the Member and of the classes of persons protected". The Committee requests the Government to indicate the measures which have been taken or are envisaged to give full effect to the Convention in this respect.

Article 71, paragraph 2. The Committee recalls that, by virtue of the provisions of the Convention, the total of the insurance contributions borne by the employees protected shall not exceed 50 per cent of the total of the financial resources allocated to the protection of employees and their wives and children. In order to be in a position to assess the effect given to this provision of the Convention, the Committee requests the Government to provide in its next report the statistics requested in the report form under this Article of the Convention for the whole of Peruvian social security for the Parts of the Convention which have been accepted, with the exception of employment injury benefit, with regard both to the private pension and health systems (when the health system comes into force) and the schemes administered by the IPSS.

Article 72, paragraph 1. The Committee request the Government to indicate the measures which have been taken or are envisaged, in the context of the private pension system, to give effect to this provision of the Convention which states that, where the administration is not entrusted to an institution regulated by the public authorities or to a government department responsible to a legislature, representatives of the persons protected shall participate in the management, or be associated therewith in a consultative capacity, under prescribed conditions.

2. System of pensions administered by the IPSS. Part V (Old-age benefit), Article 29, paragraph 2. The Committee notes that, by virtue of section 1 of Legislative Decree No. 25967 of 7 December 1992, no person insured under the pension schemes administered by the Peruvian Social Security Institute may obtain the grant of an old-age pension if he has not paid contributions for a minimum period of 20 full years. Such a requirement is not compatible with Article 29, paragraph 2(a), of the Convention, which states that a reduced benefit shall be secured at least to a person protected who has completed, prior to the contingency, in accordance with prescribed rules, a qualifying period of 15 years of contribution or employment. The Committee requests the Government to supply detailed information the measures which have been taken or are envisaged to give full effect to this provision of the Convention.

Part XI (Standards to be complied with by periodical payments), Article 65, paragraph 10. With reference to its previous comments, the Committee wishes to remind the Government of the importance that it attaches to the application of this provision of the Convention, which requires the adaptation of the rates of current periodical payments in respect of long-term benefits to fluctuations in the cost of living or the general level of earnings. The Committee hopes that, in accordance with the assurances given previously, the Government will be able to indicate the measures which have been adopted in practice to ensure the adjustment of old-age and invalidity benefit, in accordance with section 31 of Act No. 24-786 of 14 December 1987. It also requests the Government to supply the statistics required by the report form under Article 65, Title VI.

II. The Committee notes the information provided by the Government in its report on Convention No. 24 relating to the new private health system introduced by Legislative Decree No. 718 of 8 November 1991. The Committee notes that, with regard to medical assistance and sickness benefit, Legislative Decree No. 718 of 1991 only contains provisions of a general nature in Chapter IV. In particular, it provides that in the contract concluded between an organization providing health services and the persons covered, the parties shall agree freely to the manner and conditions under which benefits are provided, although a number of matters must be determined, such as: the benefits and other forms of compensation covered by the contract, including the percentages of coverage, the basic amounts and any ceiling to cash benefits; the waiting periods; and any exclusions from the above benefits.

However, the Committee notes that the private health system, which is established in the context of article 14 of the Constitution of Peru, will come into force on the date of the adoption of the regulations under Legislative Decree No. 718.

The Committee therefore hopes that the Government will be able to take the necessary measures to supplement Legislative Decree No. 718 of 1991 before it comes into force, for example on the occasion of the adoption of the regulations provided for under section 33 of the above Legislative Decree, so as to give full effect to the provisions of Parts II, III and VIII of the Convention (in conjunction with Parts I, XI, XII and XIII), particularly with regard to the conditions for the grant and the duration of the benefits, as well as the nature of medical benefits and the level of benefits in cash.

The Committee also refers to the comments that it has made in its observation concerning the application of Convention No. 24.

III. The Committee notes the various communications from occupational organizations (in particular, the Trade Union of Dockworkers of the Major Coastal Navigation of Callao, the Association of Retired Oil Industry Workers of the Metropolitan Area of Lima and Callao, the Association of Employees and Retired Employees of the "Electrolima", the Trade Union of Workers of the "Mercado del Pueblo SA") alleging, among other matters, the non-payment of social security benefits due to workers on the grounds of the liquidation of their fund as a result of its bankruptcy, the bankruptcy of the employer or the non-payment of contributions, as well as the ineffective appeal procedures and the absence of adjustment of benefits. It also notes the Government's reply to certain of these communications, and particularly the assurances given that the interests of the workers will be protected and obligations towards them will be respected. The Committee recalls that, in accordance with Article 71, paragraph 3, of the Convention, the State must accept general responsibility with regard to the provision of social security benefits and has to take all the measures required for this purpose, and that in accordance with Article 72, paragraph 2, it has to ensure the proper administration of the institutions and services concerned in the application of the Convention. The Committee requests the Government to continue supplying detailed information on the measures taken in practice to ensure that full effect is given to these fundamental provisions of the Convention, in accordance with the assurances that it has given.

IV. With reference in particular to the communication transmitted on 13 April 1994 by the Latin American Central of Workers (CLAT), and taking into account the fact that this matter was subsequently the object of a representation made by the CLAT under article 24 of the Constitution in respect of the Government of Peru, the Committee has decided to postpone its examination of this question until the adoption of the report of the tripartite committee set up by the Governing Body to examine the representation.

The Committee requests the Government to provide detailed information in its next report on all the matters raised in this observation and in the request that it is addressing directly to the Government.

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The Committee notes that the Association of Retired Oil Industry Workers of the Metropolitan Area of Lima and Callao has transmitted new observations, which were received by the Office in November 1995. These observations were transmitted to the Government on 17 November 1995 for it to make its own comments. The Committee trusts that the Government's next report will also include its comments and information on the matters raised by the above organization, as well as on the points raised in the Committee's observation and direct request of March 1995.

CMNT_TITLE

The Committee takes note of the detailed information communicated by the Government in its report, particularly concerning the new pensions system introduced by Legislative Decree No. 25897 on the private system for the administration of pension funds (SPP) of 27 November 1992, as well as by Supreme Decrees Nos. 206-92-EF and 220-92-EF. The Committee also notes the comments of "Centro Union de Trabajadores de Perú IPSS".

The Committee takes note, in particular, that the national social security pensions system administered by the Peruvian Institute of Social Security will continue to be in effect for its present members, unless they opt to be members of the new private pensions system. It also notes that new entrants to the labour market have the option of joining one or the other of the above systems. However, the Committee notes that once they have joined a pension fund administration (AFP), the wage-earners can only rejoin the IPSS national system during a transitional period of two years after the entry into force of the new law, that is to say until 6 December 1994. Given the importance and the complexity of the questions raised regarding the implementation of the Convention by the establishment of the private system for the administration of pension funds, the Committee decided to defer the examination until the next session.

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I. The Committee notes that the Government's report has not been received. It hopes that a report will be supplied for examination by the Committee at its next session and that it will contain full information on the matters raised in its previous direct request, which read as follows:

1. Part XIV (Miscellaneous provisions), Article 76, paragraph 1(b)(i) of the Convention (in conjunction with Articles 9(d) and 48(c)) (Scope of medical care). The Government states in its report that, under Agreement No. 2-24-IPSS-86, medical care has been extended to the children of insured persons up to the age of 18 years and that the necessary administrative arrangements for the full implementation of the Agreement will be made by the Directorate of the National Health Scheme. The Committee notes this statement with interest and hopes that the Government will not fail, in its next report, to indicate whether the necessary steps have been taken by the above-mentioned Directorate and, if so, to report on the results obtained in practice.

The Committee has also examined the text of the new General Act of the Peruvian Institute of Social Security (Act No. 24-786 of 14 December 1987) enclosed with the last report, and it notes with interest the various categories of persons - including family members and persons engaged solely in their own household duties - to which the insurance scheme has been extended under section 5 of this Act. The Committee none the less notes that, under section 6 of the above-mentioned Act, the extension of the insurance to the sectors and categories of persons listed under section 5 of the Act will be implemented gradually and in accordance with the specifications for application, financing and administration established by the Institute which will also determine the benefits to be granted in each case.

The Committee therefore requests the Government to: (a) indicate whether the spouses and children of the persons protected already benefit, in practice, from the medical care provided for by the Convention - not only in the case of maternity but also in the case of morbid condition; and (b) supply the statistical information required by the report form under Title V of Article 76 (since, by accepting Part II of the Convention, the Government has availed itself of the temporary exception provided for in Article 9(d), unless it now wishes to renounce this exception).

2. Part XI (Standards to be complied with by periodical payments). (a) With regard to the review of long-term benefits, provided for by Articles 65, paragraph 10, and 66, paragraph 8, of the Convention, on which the Government was requested to provide information, the Committee notes the statement to the effect that the Institute of Social Security has been requested to supply this information which will be transmitted in a supplementary report. The Committee hopes that the Government will not fail to provide the relevant statistical data required by the report form on the Convention under Title VI of Article 65, pursuant also to section 31 of Act No. 24-786 referred to above, which provides for such a review.

(b) The Committee also notes that the fifth transitory provision of Act No. 24-786 fixes a minimum and a maximum amount for remuneration subject to contributions, and that Act No. 23-908 of 6 September 1984 also fixes a minimum amount for the various benefits granted. The Committee asks the Government to indicate in its next report - on the basis of precise statistical data - whether the amount of sickness benefit, old-age benefit and employment injury benefit and the amount of invalidity benefit granted by the Social Security Institute attain the percentages fixed by the Convention for a standard beneficiary (i.e. as appropriate, a man with a wife and two children or a man with a wife of pensionable age). Please establish the above-mentioned statistics in the manner required by the report form on the Convention either under Article 65, or under Article 66, according to whether the Government wishes to take the wage of a skilled manual male employee or that of an ordinary adult male labourer as the basis for its calculations.

II. The Committee is aware of the adoption of Legislative Decree No. 25897 of 27 November 1992 establishing a Private Pension Fund Administration system (SPP) managed by the Private Pension Fund Administration (AFP). It hopes that the next report will also contain detailed information, especially on the impact of the privatization of the pension scheme on the application of Parts V (Old-age benefit) and IX (Invalidity benefit) of the Convention, as required by the report form adopted by the Governing Body on the application of these Conventions.

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The Committee takes note of the information supplied by the Government in reply to its previous comments, and would be grateful if it would provide particulars on the following points:

1. Part XIV (Miscellaneous provisions), Article 76, paragraph 1(b)(i) of the Convention (in conjunction with Articles 9(d) and 48(c)) (Scope of medical care). The Government states in its report that, under Agreement No. 2-24-IPSS-86, medical care has been extended to the children of insured persons up to the age of 18 years and that the necessary administrative arrangements for the full implementation of the Agreement will be made by the Directorate of the National Health Scheme. The Committee notes this statement with interest and hopes that the Government will not fail, in its next report, to indicate whether the necessary steps have been taken by the above-mentioned Directorate and, if so, to report on the results obtained in practice.

The Committee has also examined the text of the new General Act of the Peruvian Institute of Social Security (Act No. 24-786 of 14 December 1987) enclosed with the last report, and it notes with interest the various categories of persons - including family members and persons engaged solely in their own household duties - to which the insurance scheme has been extended under section 5 of this Act. The Committee none the less notes that, under section 6 of the above-mentioned Act, the extension of the insurance to the sectors and categories of persons listed under section 5 of the Act will be implemented gradually and in accordance with the specifications for application, financing and administration established by the Institute which will also determine the benefits to be granted in each case.

The Committee therefore requests the Government to: (a) indicate whether the spouses and children of the persons protected already benefit, in practice, from the medical care provided for by the Convention - not only in the case of maternity but also in the case of morbid condition; and (b) supply the statistical information required by the report form under Title V of Article 76 (since, by accepting Part II of the Convention, the Government has availed itself of the temporary exception provided for in Article 9(d), unless it now wishes to renounce this exception).

2. Part XI (Standards to be complied with by periodical payments). (a) With regard to the review of long-term benefits, provided for by Articles 65, paragraph 10, and 66, paragraph 8, of the Convention, on which the Government was requested to provide information, the Committee notes the statement to the effect that the Institute of Social Security has been requested to supply this information which will be transmitted in a supplementary report. The Committee hopes that the Government will not fail to provide the relevant statistical data required by the report form on the Convention under Title VI of Article 65, pursuant also to section 31 of Act No. 24-786 referred to above, which provides for such a review.

(b) The Committee also notes that the fifth transitory provision of Act No. 24-786 fixes a minimum and a maximum amount for remuneration subject to contributions, and that Act No. 23-908 of 6 September 1984 (appended to the report) also fixes a minimum amount for the various benefits granted. The Committee asks the Government to indicate in its next report - on the basis of precise statistical data - whether the amount of sickness benefit, old-age benefit and employment injury benefit and the amount of invalidity benefit granted by the Social Security Institute attain the percentages fixed by the Convention for a standard beneficiary (i.e. as appropriate, a man with a wife and two children or a man with a wife of pensionable age). Please establish the above-mentioned statistics in the manner required by the report form on the Convention either under Article 65, or under Article 66, according to whether the Government wishes to take the wage of a skilled manual male employee or that of an ordinary adult male labourer as the basis for its calculations.