Despite the fact that the Retirement Savings System (SAR) maintains financial strength, it is expected that the industry will experience a challenging and uncertain outlook during 2023 due to high levels of inflation and an economic slowdown in the country, according to the Moody’s agency.
According to the rating agency, the greatest pressures could be seen mainly in savings yields, which have already presented slight effects over the last 12 months.
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“For 2023, the slowdown in economic growth and the effectiveness in controlling inflation could extend the fragility of yields, although we expect it to be more attenuated than in 2022,” Moody’s commented.
Through a report, the firm added that although the Retirement Fund Managers (Afores) face new adaptations, such as lower income from commissions, they are expected to continue as the main institutional investor in the country.
According to Moody’s, it will not be until after 2023 when the Afores will absorb the effect of the commission cut and its impact on profits. In addition, it specified that the decrease in profit is also the result of losses in its financial and investment income.
“We believe that the lower fee income, which had fallen 26 percent between January and August 2022, will not compromise the continuity of the Afores’ business, although it will lead to the lowest profit levels in the history of the sector” , he detailed.
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By the end of 2022, the rating agency estimated that the Afores will manage more than 72 million individual accounts, with resources equivalent to 16 percent of the country’s Gross Domestic Product (GDP).