It is a common pool, not individual accounts
In Lima's legislative halls, a recurring tension between immediate relief and long-term security has surfaced once more: Congressman Darwin Espinoza has introduced the tenth proposal this session to allow Peruvians to withdraw funds from the ONP public pension system, this time up to S/21,400 per eligible worker. The measure speaks to a genuine human wound — workers who contributed for years yet fall short of qualifying for a pension — but critics warn it misreads the very nature of a pay-as-you-go system, where today's contributions are already sustaining today's retirees. Peru has walked this road before, and the Constitutional Court turned it back in 2021; the question now is whether political pressure will find a different path, or whether the system's most vulnerable dependents will bear the cost of the attempt.
- Ten competing pension withdrawal bills now circulate through Congress, each promising economic relief to workers locked out of their own contributions — a legislative wave that signals deep public frustration with Peru's pension system.
- Former Economy Minister Luis Castilla warns the proposals rest on a dangerous misconception: the ONP holds no individual accounts, and mass withdrawals would drain the shared pool that keeps current retirees solvent today.
- The Constitutional Court already struck down a similar measure in 2021, ruling it threatened fiscal sustainability and violated prohibitions on Congress creating new spending obligations — a precedent the new bills have yet to answer.
- Espinoza's bill also proposes graduated monthly pensions for retirees with ten to nineteen years of contributions, targeting those economically stranded just below the standard twenty-year threshold.
- The proposal now awaits review by the Budget and Economy commissions, where the collision between political urgency and structural fiscal reality will determine whether history repeats or breaks.
Congress has returned to one of Peru's most persistent legislative debates: whether workers should be allowed to withdraw funds from the ONP, the country's public pension system. Congressman Darwin Espinoza of the Podemos party has introduced the tenth such proposal this session, seeking to permit one-time extraordinary withdrawals of up to S/21,400 — four tax units — for workers who contributed to the ONP but never qualified for a pension, never joined the private system, and never received a recognition bond. The bill frames the measure as a matter of basic fairness: these are people with money in a system they cannot access.
The proposal goes further than unlocking savings. It also includes graduated monthly pension amounts for retirees aged sixty-five or older who fall short of the standard twenty-year contribution requirement — S/900 per month for those with at least ten years of contributions, and S/1,300 for those with fifteen. Espinoza argues both components address a structural gap that leaves longtime contributors economically stranded in old age, and that the bill fits within existing fiscal responsibility frameworks.
The criticism has been swift and pointed. Luis Castilla, a former Economy Minister, argues the proposal fundamentally misunderstands how the ONP operates. Unlike private pension accounts, the ONP is a pay-as-you-go system: contributions from today's workers directly finance pensions for today's retirees. There is no separate reserve waiting to be withdrawn. Allowing mass withdrawals, Castilla warns, would not simply return individual savings — it would hollow out the fund sustaining current pensioners.
The concern is not without precedent. In 2021, Peru's Constitutional Court struck down a comparable withdrawal bill, ruling it threatened the system's financial sustainability and violated constitutional prohibitions on Congress creating new spending obligations. That ruling remains in force, yet the political pressure has not relented. Nine other lawmakers have introduced competing bills, with proposed withdrawal amounts ranging from two to five UIT, and one measure reaching as high as fifty percent of accumulated funds across both public and private systems.
The bill now moves to the Budget and Economy commissions for review. Whether Congress will find a way around the constitutional barriers that blocked the last attempt — and at what cost to the retirees who depend on the system's solvency — remains the central question.
Congress is back in session, and the pressure to let Peruvians tap their pension savings is mounting again. This time, congressman Darwin Espinoza from the Podemos party has introduced legislation that would allow workers to withdraw up to 21,400 soles—the equivalent of four tax units, or UIT—from their accumulated contributions to the ONP, Peru's public pension system. It is the tenth such proposal circulating through the legislature, each one promising economic relief to families and a boost to consumer spending.
Espinoza's bill targets a specific group: workers who have never qualified for a pension, who never joined the private pension system, and who never received a recognition bond. The logic is straightforward, at least on its surface. These are people with money sitting in the system they cannot access. Let them have it. The proposal frames the withdrawal as extraordinary and one-time only, with the actual mechanics—how people apply, how the money gets validated, how it gets paid out—to be worked out by regulation within thirty days of the law taking effect. Payments could come in installments, the bill suggests, prioritizing those in the most vulnerable economic situations.
But Espinoza's proposal does more than just unlock savings. It also includes a second component: a gradual increase in pension amounts for retirees who do not meet the standard twenty-year contribution threshold. Workers aged sixty-five or older with at least ten years of contributions would qualify for 900 soles per month. Those with fifteen years of contributions would get 1,300 soles monthly. The congressman frames both measures as responses to a real problem: people who have worked and contributed for years but fall just short of the requirements to receive a pension, leaving them economically stranded in old age.
The bill has been sent to the Budget and Economy commissions for review. If approved, the Ministry of Economy and the ONP itself would need to issue the implementing regulations. Espinoza argues his proposal violates no existing law and fits within fiscal responsibility frameworks, positioning it as part of a larger structural reform of the pension system.
Yet the proposal has already drawn sharp criticism from someone who knows the system intimately. Luis Castilla, who served as Economy Minister, says the entire premise rests on a fundamental misunderstanding of how the ONP actually works. The system is not a collection of individual accounts, he explains. It is a pay-as-you-go pool: current workers' contributions finance current retirees' pensions. There is no separate pot of money sitting aside waiting to be withdrawn. Allowing mass withdrawals would not just tap individual savings—it would drain the common fund that keeps pensioners alive today. "It is nonsensical," Castilla told the outlet, warning that such measures would cause serious damage to the system.
This is not theoretical. In 2021, Peru's Constitutional Court struck down a similar withdrawal proposal, finding it violated the principle that pension funds cannot be touched, threatened the financial sustainability of the system, and violated rules against Congress creating new spending obligations. The court's reasoning is still the law of the land.
Yet the pressure continues. Nine other lawmakers have introduced competing bills, ranging from withdrawals of two UIT to five UIT, and one proposal that would allow withdrawals of up to fifty percent from both the private and public pension systems. Some bills include pension increases; others focus purely on withdrawals. They represent different political blocs and different constituencies, but they all point in the same direction: toward opening the pension system to immediate access.
The question now is whether the Economy Commission will recommend approval, and whether Congress will vote to override the constitutional concerns that killed the last attempt. For workers struggling to make ends meet, the appeal is obvious. For the system itself, and for the retirees who depend on it, the stakes are equally clear.
Notable Quotes
It is nonsensical to propose these measures—they will cause serious damage to the SNP— Luis Castilla, former Economy Minister
The withdrawal should prioritize criteria of equity, vulnerability, and economic urgency— Darwin Espinoza's bill, Article 4
The Hearth Conversation Another angle on the story
Why does Espinoza think this withdrawal would actually help the economy? Isn't it just moving money around?
He's betting on the multiplier effect—that people will spend the money immediately on goods and services, stimulating demand. But Castilla's point is different: there may not be money to move. It's not a savings account.
So the ONP doesn't have a reserve? It's all committed?
Exactly. It's a pay-as-you-go system. What comes in from workers today goes out to retirees today. There's no separate pool sitting idle.
Then where would the 21,400 soles per person come from if the law passed?
That's the core problem. Either you reduce what current retirees get, or you create a deficit the government has to cover. Either way, you're not creating new money—you're redistributing it, and potentially breaking the system in the process.
Has Congress tried this before?
Yes. The Constitutional Court killed a similar bill in 2021, saying it violated the untouchability of pension funds and threatened financial sustainability. But that hasn't stopped lawmakers from trying again.
Why keep pushing if the court already said no?
Political pressure. Voters want access to their money. Lawmakers respond to that demand. The court's decision is still binding, but that doesn't stop new proposals from being introduced.