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Peru Pension Guide

the Peru pension system for 2026. The guide covers: the ONP (Sistema Nacional de Pensiones) — the "defined benefit" (the "prestación definida") public pension system with the employee contribution of 13% and the maximum pension of approximately 1 UIT (S/ 5,150) per month; the AFP (Sistema Privado de Pensiones) — the "defined contribution" (the "contribución definida") private pension system with the individual capitalisation accounts, the multifund investment options, and the pension payouts based on the account balance; the retirement age of 65 for both systems; the early retirement options for the AFP members; the voluntary contributions including the CTS (the "Compensación por Tiempo de Servicios") and the "AFP voluntary contribution" (the "Aportes Voluntarios"); the SIS basic health coverage for the retirees.

ONP — Sistema Nacional de Pensiones (Defined Benefit)

• Defined benefit structure: The ONP (the "Oficina de Normalización Previsional") provides the "defined benefit" pension — the pension amount is determined by the "formula based on the average salary and the years of contributions" rather than the individual account balance. The ONP pension is the "pay-as-you-go" (the "reparto") system — the current contributions fund the current pension payments.
• Contribution rate — 13%: The ONP member contributes 13% of the monthly salary, capped at the maximum of 1 UIT per year (approximately S/ 5,150 for 2026). The minimum contribution period is 20 years (240 months) for the full pension. The reduced pension ("pensión reducida") is available with 10 to 19 years of contributions.
• Pension calculation: The ONP pension is calculated as: (a) the "average salary" (the "remuneración de referencia") — the average of the last 60 months of contributions, (b) the "replacement rate" — approximately 50% of the average salary for 20 years of contributions, increasing by 4% for each additional year up to the maximum of 100%, (c) the maximum pension of 1 UIT (S/ 5,150) per month for 2026.
• Pension age — 65: The ONP pension age is 65 years for both men and women. The early retirement is NOT available under the ONP — the member must reach the age of 65 to receive the pension, regardless of the contribution period.

AFP — Sistema Privado de Pensiones (Defined Contribution)

• Defined contribution structure: The AFP (the "Administradora de Fondos de Pensiones") provides the "defined contribution" pension — the member accumulates the individual account balance (the "Cuenta Individual de Capitalización" — the "CIC") through the monthly contributions (10% of the salary) and the investment returns. The pension amount depends on the total account balance at the retirement.
• Multifund investment options: The AFP member may choose from the "multifunds" (the "Multifondos") with the different risk profiles: (a) the Fondo 0 — the most conservative (the fixed income only, for the members aged 60+ or the conservative investors), (b) the Fondo 1 — the conservative (up to 10% in the variable income), (c) the Fondo 2 — the balanced (up to 45% in the variable income, the default fund), (d) the Fondo 3 — the growth (up to 80% in the variable income, for the younger members).
• Pension payout options at 65: At the retirement age of 65, the AFP member may choose: (a) the "lifetime annuity" (the "Renta Vitalicia") — the insurance company pays the monthly pension for the lifetime of the member and the beneficiaries, (b) the "programmed withdrawal" (the "Retiro Programado") — the member withdraws the monthly amount from the individual account until the account is exhausted, (c) the "mixed system" — the combination of the lifetime annuity and the programmed withdrawal, (d) the "lump-sum withdrawal" — the withdrawal of the account balance exceeding the amount needed to fund the minimum pension.
• Early retirement for AFP: The AFP member may retire BEFORE the age of 65 if the individual account balance is sufficient to fund the pension equal to at least 50% of the average salary of the last 10 years (or the "Remuneración Mínima de Referencia" — the "minimum reference salary") AND the pension amount is at least S/ 500 per month (approximately). The early retirement is available from the age of 50 (for the members with the sufficient balance).

Voluntary Contributions — CTS and Aportes Voluntarios

• CTS (Compensación por Tiempo de Servicios): The CTS is the "severance compensation" — the employer deposits the amount equivalent to approximately 50% of the monthly salary (the "remuneración computable") to the employee's CTS account twice per year (in May and November). The CTS funds may be withdrawn only under the specific circumstances: (a) the termination of employment, (b) the purchase of the primary residence, (c) the medical emergency. The CTS funds held in the AFP account earn the interest and are available as the lump-sum at the retirement.
• AFP Voluntary Contributions (Aportes Voluntarios): The AFP member may make the "voluntary contributions" (the "Aportes Voluntarios sin Fin Previsional" — the "AVP") to the individual account IN ADDITION to the mandatory 10% contribution. The voluntary contributions are: (a) the tax-deductible up to the limit of 20% of the annual income, (b) the flexible in the amount and the frequency, (c) the invested in the same multifund or the separate investment portfolio.
• Tax treatment: The voluntary contributions to the AFP are deductible from the annual income tax (the "Impuesto a la Renta") up to the limit of approximately 20% of the annual gross income. The investment returns within the AFP account are tax-deferred — the tax is payable only upon the withdrawal of the funds at the retirement.

SIS Basic Health Coverage for Retirees

• SIS (Seguro Integral de Salud): The retirees who are NOT covered by the ESSALUD may enrol in the "SIS" (the "Seguro Integral de Salud") — the government-subsidised health insurance program. The SIS provides the basic health coverage including the medical consultations, the hospitalisation, the emergency care, and the essential medications.
• SIS for the pensioners (SIS Pensionista): The AFP and the ONP pensioners may enrol in the "SIS Pensionista" — the special SIS plan for the retirees. The monthly premium is approximately S/ 50 to S/ 100 depending on the age and the coverage level. The low-income pensioners (the "pensión mínima" recipients) may receive the SIS coverage at the reduced cost or the free coverage.
• ESSALUD for the pensioners: The retirees who contributed to the ESSALUD during the working years may continue the ESSALUD coverage after the retirement. The ESSALUD coverage for the pensioners includes: (a) the "regular health coverage" (the "cobertura regular") — the same benefits as the active workers, (b) the "pensioner contribution" — the pensioner pays the ESSALUD contribution of 4% of the pension amount (if the pension exceeds S/ 500 per month).