Peru

Publications

Situation and Priorities

Social protection situation

Peru is characterized by high levels of informality and low levels of coverage, with only about 26% of the employed population contributing to social security (MTPE, 2020– a system that covers the contingencies of disability, old age, death, illness and accidents at work, as well as occupational diseases. The low coverage has seen a large and necessary expansion through non-contributory programmes that target vulnerable households.

The pension system is mainly composed of two regimes: the National Pension System (SNP) and the Private Pension System (SPP). The former is a pay-as-you-go mechanism, administered by the State, with the latter being an individual capitalisation system administered by the Pension Funds Administrators. More than twenty-five years since the 1993 reform that introduced the SPP, progress in the area of contributory pension coverage has been limited, with only 26% of the employed population contributing, well below the regional average of 45%. The non-contributory pension programme provides a partial and insufficient solution to the low coverage levels, helping raise total pension coverage to 44%, but remaining well below the regional average (71%).

Almost the entire Peruvian population is covered by some type of health insurance, split between the state-subsidised Comprehensive Health Insurance (SIS) and the Social Health Insurance (EsSalud). However, there is still a high degree of fragmentation, barriers to access, and large differences in coverage among different groups.

COVID-19 and other crises

In order to face the adverse effects of the crisis, the Peruvian Government has put in place a significant programme to protect the vulnerable population and to support businesses, which includes, amongst other measures, income support, payment of deferred taxes, and credit guarantees for the private sector. These measures are carried out within the framework of an ambitious plan of US$ 26 billion, which is the largest reactivation plan in the region, as it represents 12% of GDP, and seeks to provide liquidity to micro and small enterprises (MSEs), as well as providing cash-transfers to the most vulnerable groups of the population, including the self-employed and informal workers. Specific measures included: 

  • Workers earning up to S2.400 (Approx. $600) for companies with fewer than 100 employees could access an emergency cash transfer of up to S/760 (Approx.. $200) per month, for a maximum of three months 
  • Users of the Private Pensions System were also authorized to make, an extraordinary withdrawal of up to S/2.000 (Approx.. $520) from their accounts. 
  • Formal sector employees were authorised to access their "Compensation for Times of Services (CTS) funds, a social benefit paid by employers, normally reserved for workers after the termination of their employment. This limited unemployment benefit is available to around 26% of the economically active population,  The limitations of the CTS system were made more apparent during the COVID-19 crisis, and has shifted priorities towards developing a comprehensive system of social protection in the event of unemployment, for formal and informal workers. 
Government and social partner priorities
  • Pension system reform
  • Improving the affiliation process in EsSalud social health insurance programme. 
  • Develop a comprehensive unemployment protection system for formal and informal workers

ILO Projects and Programmes

Results

ILO Experts

IMG
Pablo Casalí
Specialist, Social Security