You are currently viewing AFP and ONP: how they differ and how to choose the pension system for your retirement

In order to get a pension from the moment of your retirementthe Peruvian Pension System (SPP) allows you to make contributions to a pension fund, whether you are a dependent or independent worker.

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This service gives you the option to choose between two main social protection systems: a public one or National Pension System (SNP); and another private or Private Pension System (SPP).

save on one AFP means belonging to Private Pension System and contribute through a Pension Fund Administrator (AFP); as long as you save on the National Pension Systemis to do it by Pension Standardization Office (ONP). Although both will ensure you a fund for your old age, there are important differences between the two.

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ONP

The National Pension System – SNP (DL No. 19990), it is managed by Pension Standardization Office (ONP) and grants you a pension from the age of 65, at the end of your working life. To enjoy this monetary benefit, You must make a monthly contribution equivalent to 13% of your salary or income for not less than 20 years. In the PNS:

  • Your contributions as a worker/worker are charitable and intangible.
  • The minimum requirements for you to obtain a retirement pension are have 20 years of accredited contributions and be 65 years of age.
  • The amount of the pension depends on the years of contributions and the average of your last effective remunerations of your working life, according to the current law.
  • The maximum amount of retirement pension is S/ 893.00.
  • The minimum pension is S/ 500.00 for pensioners with 20 or more years of contributions.

This system offers the following benefits:

  • You can access a pension of early retirement:
  • – If you are a woman: have 50 years or more and 25 years of contributions.
  • – If you are a man: be 55 years old and have 30 years of contributions.
  • If you have a spouse or partner, you can access the spousal pension provided that both add a minimum of twenty (20) years of contributions, the same ones that may have been carried out simultaneously.
  • Grants pensionsr invalidity, widowhood, orphanhood and ancestry, and death capital.

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AFP

Private Pension System – SPP: is in charge of Pension Fund Administrators (AFP) and it allows you to access a retirement pension from the age of 65, without requiring a minimum contribution period. The AFPs calculate the amount of said benefit based on your contributions made and the return generated in your individual capitalization account (CIC).. In addition, you can receive your pension in advance under the modality of “Ordinary Early Retirement”. The SPP offers you these benefits:

  • Provide a personal account called Individual Capitalization Account (CIC) where your contributions enter, they accumulate monthly and increase with the profitability they produce.
  • You can make voluntary contributions to your account, without limit.
  • You have disability insurance, survival and burial expenses.
  • You continue to receive attention from Essalud contributing 4% of your pension.
  • Your pension will be calculated based on your background.
  • You can choose different types of pension.
  • It allows you to receive your pension in soles or dollars.
  • You can retire before age 65 if you meet the requirements of the Law No. 29426.
  • You have the opportunity, under certain conditions, that the ONP I gave you a Recognition Bonus if you contributed to the SNP before joining an AFP.
  • You receive an account statement every four months.

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Also, there is a institution that manages the funds destined to offer a pension to soldiers and police officers:

Military-Police Pension Fund: if you belong to Armed Forces or the National Police of Peruoffers you a renewable or non-renewable pension when you have fulfilled the minimum length of service required by law.

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