Early pension withdrawals and their uneven long-term effects in Peru

This article examines the potential impact of early
pension withdrawals from Peru’s individual retirement
account system. Originally introduced as a policy response to
the COVID-19 pandemic, a number of large withdrawals
were allowed during and after the pandemic. We find that
these policies can reduce expected pension wealth by about
40 per cent, but there are important heterogeneous effects.
There is a socio-economic gradient in the distribution of
pension fund losses, with individuals at the lower end of the
income or savings distribution experiencing larger losses.
Losses are also higher for men and older people, who have
less time to rebuild their pension pots.