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AFP Confía geared up for great change after El Salvador's pension reform | World Finance
World Finance: 2017 saw long-awaited pension reforms in El Salvador: increasing mandatory contributions, and allowing greater international investment by pension funds. AFP Confía is the largest pension fund in Central America and the Caribbean; joining me are CEO Lourdes Arévalo and board member Robert Vinelli. Robert, introduce us to AFP Confía and El Salvador's pension system. Robert Vinelli: Well, Salvador was originally a government-run retirement fund. And because they were having problems, they privatised it. The issue really becomes the government has used funds in order to pay for the social security problems they had before. They were paying one percent, and now they are increasing it slowly. And the retirement of the workers is now becoming more and more healthy. The economy of Salvador is growing; not as well as we'd like, but at a healthy 2.3 percent. And we expect that the funds will continue to grow very nicely for the retirement. World Finance: So how have the 2017 reforms changed things – both for retirees and the pension funds themselves? Lourdes Arévalo: I think one of the most important things the reform did was create a mechanism for longevity. This mechanism works like insurance for all the people, so they can have their pension paid for their lifetime. The other thing the reform did was open the possibility to invest in foreign markets – we didn't have that before. And also allow the people to obtain 25 percent of their fund in advance. So I think this was very, very good for the system. World Finance: And how has AFP Confía responded to these changes? Lourdes Arévalo: Well, change was always there, for the last 20 years that we have been operating the AFP. We have to think outside of the box, to see all the technologies, new ways to contact clients. Also we are changing our core system – we're moving to SAP – which is a huge change for us. But it will be more efficient for the operations. We're focusing on innovation. Innovation, efficiency. Looking for our client experience. We're just looking everywhere for best practices to introduce new technologies, new tools, to serve our clients. The most important thing I think is, we have to assure our people that we're protecting their money during their pension lifetime. So we have high standards in risk management, investment management, and there's a lot of international standards we're looking for and we're following in audit, compliance, operations, human resources – and of course, technology. World Finance: And Robert, what is the strategy and the ambition for AFP Confía over the next five years? Robert Vinelli: Well, we're not only expecting to be number one in Central America, as we are now, but even bigger. And serving more people, and serving them even better. The fact that some of the reforms causes our profit to lessen for a short period of time, we're expecting to recoup that, as Lourdes said, through technology, through efficiency, through all the other systems. But more important through South American expansion that we expect to carry out very quickly in the next years. World Finance: Lourdes, Robert, thank you very much. Lourdes Arévalo: Thank you very much. Robert Vinelli: Thank you very much, it's been a pleasure. Click now to watch the second half of this interview, and learn more at confia.com.sv. Thanks for watching, and please subscribe for the latest international business insights from worldfinance.com
