In this interesting article you will learn aboutwhat is the best afp in Chile? its characteristics and you will also know the most profitable. Go ahead and select the most convenient!
¿What is the best AFP in Chile?
Before entering fully into this interesting and important topic, you need to know the meaning of the acronym AFP. They correspond to the Administration of Pension Funds in Chile.
This question becomes one of the most interesting problems to solve, but we will say that everything is related to the personal interests that the worker has, that is, some will give greater importance to the economic point of view, which plays a determining role.
For their part, other workers can reflect on what the cost of the investment would be, if it is cheap and within reach, and for others, the production of more and better returns prevails as a selection criterion. Learn about profitability, in this interesting link you will find what you need Annualized return
Perhaps it is a viable alternative to select an AFP in terms of planning for the future and looking for a fund that is of good profitability; If, on the other hand, you are a person who currently enjoys a good salary, the option would be to choose an AFP with low commissions and expenses.
Rental income
Many workers consider looking for an AFP considering the profitability factor. In this sense, the Superintendency of pensions publishes a list (Ranking) of profitability monthly, locating those that meet the standards of excellence according to the criteria set by that competent body.
Due to the foregoing, the worker has the opportunity to receive reliable and timely information in order to be able to observe the behavior of Types A, B, C, D and E Funds of each AFP in order to choose the most appropriate one that satisfies their concerns and/or or needs.
To illustrate the above, we will carry out a dynamic whose objective is to illustrate the characteristics of Funds A and E.
Type A Fund is considered the most profitable in the long term, but failing that, it is the one with the greatest risk of loss. It is considered to have extreme volatility, but when it recovers it is the one that rises the most compared to the other types.
In the event that a worker has many years of useful life left, from the labor point of view, it is advisable to select this type of fund in the mandatory account.
For its part, the E-type Fund presents the characteristic of being less risky with respect to the previous one and constitutes an excellent option. Your selection to make short-term savings in the so-called account 2, by the worker, offers you greater profitability if we compare it with a term deposit in a commercial bank.
Which is the cheapest in Chile?
As we have pointed out in previous paragraphs, the selection of the pension fund administration continues to be eminently subjective, that is, it depends on the wishes, preferences or conveniences of the worker.
In this context, if we take these reasons into consideration, it is very difficult to objectively establish a standard criterion to accurately determine which is the lowest cost in the country.
From this perspective, the criterion of selecting the alternative that shows the least cost in commissions or maintenance expenses of the account in the Fund and also the one that gives the worker the greatest utility or profitability is visible.
What is the best AFP in Chile in 2020?
We know the immense interest that workers have in being updated regarding the best pension fund administrators, for this reason we present an analysis to answer that question you are asking yourself.
Determining which is the most important is a difficult mission, however, it is possible to consider three approaches that will surely help you standardize more uniform criteria that allow you a balanced selection.
Taking these points into account, we move on to discuss the factors that you should take into account before selecting a pension fund administration.
These elements are: Firstly, the profitability that these funds offer us, secondly, the commissions charged by said funds and last, but not least, the subjective factors explained above.
Administration of pension funds
We tell you that Chile currently has seven Pension Fund Administration, namely the following:
- AFP Capital
- AFP Cuprum
- AFP Habitat
- AFP Model
- Planvital AFP
- AFP Prolife
- AFP ONE
Selection criteria for which is the best afp
Below is an analysis of the best pension fund managers. According to sources from the Superintendency of Pensions, based on the measurement parameters: Profitability and Volatility of Returns (2019).
- Better AFP – Riskier profile: TAll the AFPs have had negative returns of around -5% in the period and volatilities above 7%.
- Best AFP – Risky profile: Again, All the AFPs have had negative returns of around -3% and volatilities above 5%.
- For an intermediate profile, the AFP with the highest profitability is AFP Capital with a return of -0,89%.
- For an intermediate profile, the AFP with the highest profitability is AFP Capital with a return of -0,89%.
- Best AFP – Conservative Profile: For a conservative profile, the AFP Model It is the one that offers the highest profitability with 0,88% and a volatility of 2,36%.
- More conservative profile: In this index, the AFP with the highest profitability for the most conservative risk profile is the AFP Habitat with a reduced volatility level of 3,04%.
From the previous analysis we will show the following data that you must take into account:
- Profitability: The AFP that observes a good behavior, under the selected line (profitability) is Capital.
- Participation: Regarding this indicator, according to the Superintendence of Pensions in November 2019, in terms of the line with the highest participation, we find the following data: Habitat (27,9%), followed by Provida (24,9%), Equity (19,2%) and Cuprum (19,0%). While the AFPs with the lowest percentage of managed assets are: Modelo (5,5%) and Planvital (3,4%).
- Affiliates: With respect to this indicator, we have to mention that popularity is an important psycho-sociological phenomenon that can influence the selection of a certain pension administration fund, inferring factors such as better quality of services or less burdensome maintenance costs. accounts and excellence in dealing with users.
Next, we present the results for the number of affiliates of each AFP in the last 5 years according to the Superintendency of Pensions. In this line, the result was as follows: PLANVITAL , with growth close to 300%, followed by MODELO , which grew 17%. At the other end, the AFPs that lost the largest number of affiliates were PROVIDA and CAPITAL, which fell by almost 10% each.
- Commissions: Another indicator to consider is the collection of fewer commissions. The Administration that charges the least commissions is the so-called Model with a percentage of 0,77%. In contrast to Provida with 1,45%.
Considering all the information analyzed and to answer the question, we can round off the idea of establishing what will be the criteria to justify the selection of the respective fund.
In this sense, if we choose Planvital considering the number of users, if the criterion is of an economic nature relative to the lowest commissions, then the AFP to select would be Model and if the interest consists in profitability, then the inclination would be Capital . Everything will depend on your interests and needs to shape your selection.
To summarize, in addition to the indicators expressed in the previous paragraphs, two important elements must be taken into account for the selection of the AFP, such as the age of the worker and the pension contribution rate, both of which play a highly relevant role. .
Age is taken into account as it is the cause of origin of the pensioner for the enjoyment of his retirement pension and constitutes a compelling reason for planning profits in the future and in terms of contribution rates, as it is a variable. whose value is indefinite and unpredictable, which fluctuates according to the exogenous forces that interact in the Chilean economy.
More about which is the best AFP
In order to offer you more information on this topic, we would like to tell you that pension fund administrators are private financial institutions whose main purpose is to manage funds from individual savings account workers for pensions.
These funds are governed by the individual capitalization system, which consists of each person saving a portion of their income to support a pension at the time of their retirement. It is necessary to assume that this saving, like any financial instrument, generates profits that are credited to the saver.
Before the reform that occurred in Chile regarding the implementation of the individual capitalization system, there was a system of pension funds, through which workers made their contributions according to the type of work they performed in the different branches of industry.
The operating mechanism of these funds was as follows: They made the discount in the form of a tax on the workers who belonged to said fund in order to pay the pension to its retired workers; it was also known as the distribution system, in a more colloquial language.
The administration of the pension fund was created during the government of General Augusto Pinochet and is considered a strength of the country's economic model.
The phenomenon that is currently occurring in Chile is interesting. Countless people are close to being able to withdraw a percentage of their savings from private pension fund administrators.
Given the approval in Congress of the "10% law", the withdrawal of that percentage of funds. The decision is motivated by the situation that the world is experiencing with the Covid-19 pandemic, generating an increase in the unemployment rate and the serious economic recession that the countries are experiencing. This measure was not well received by private insurers or by the national government.
Next, we offer you an audiovisual material so that you can observe how the administration of the pension fund currently works.