The Withdrawal Ratchet: Why Did Peru’s Congress Reverse Its Own Pension Restrictions?

The Withdrawal Ratchet: Why Did Peru’s Congress Reverse Its Own Pension Restrictions?

Economics

4th October 2026

Salvador Quesada Boza

Between 2020 and 2025, Peru’s government and Congress enacted eight measures that let people withdraw money from their compulsory private pension accounts. In 2024, Congress passed a reform banning further withdrawals. The ban began to apply on 6 September 2025. Fourteen days later, Congress published a law that allowed another withdrawal and removed the restrictions the reform had introduced. This paper asks why Congress reversed a restriction it had itself approved. It proposes a working hypothesis: once withdrawals became politically normal, voting against was costlier than voting for. A legislator’s earlier stance should then predict little about their later vote. The paper tests this on a panel of 130 legislators over five plenary votes cast by the Congress elected in 2021. It uses four votes from an earlier, separate Congress only for context. The evidence is descriptive, not causal. Support never fell below 90 per cent of votes cast in the Congress elected in 2021 and reached 95.7 per cent in September 2025. Twenty-three legislators voted for a withdrawal in April 2024, for the reform in June 2024 and for the reversal in September 2025. Of the legislators who backed the reform, 33 of 38 voted for the reversal. Of those who opposed it, 9 of 10 did. Emergency relief alone is hard to reconcile with the later withdrawals. Party coordination is consistent with part of the record, not all of it. Public demand cannot be ruled out. Electoral incentives and ideology are not tested.

Peru, pension withdrawals, private pension system, political economy, congressional voting, pension reform, public policy, legislative behaviour, Peru Congress, social security