AFP Profits

New Evidence for an Old Debate

Abstract

Several experts from academia and the financial industry are irritated by the criticism leveled at the profits earned by the AFPs (pension fund administrators), mainly for three reasons: first, because the AFPs' administration costs are lower than those charged in several Latin American countries and also lower than those charged by other investment alternatives in Chile, such as mutual funds. Second, even if the AFPs provided their services free of charge, pensions would not improve, since people would not reinvest these savings in their individual pension accounts. Lastly, in light of the scandals we have witnessed in recent years, they dislike the demonization of profit and of business activity in general. Continue reading...