• May 22, 2019
  • by Enrique Barrios / José Bernal

The Pension Fund Administrators (AFPs in Spanis) fulfill an extremely important task in the Bolivian
capital markets. Together with Private Investment Funds (SAFIs in Spanish) and the insurance
companies, the AFPs are the main investors in bond issues made through the Bolivian Stock
However, the presence of AFPs in Bolivia will eventually end. The Pension Law (Law 065 of
December 10, 2010) establishes that the Pension System will be transferred from the AFPs to the
control of a State Pension Fund, incorporated as a National Strategic Company. The full
implementation of the State Pension Funded, contemplated for 2016, has already been delayed in
three separate occasions. Recently, Supreme Decree 3837 dated March 20, 2019, has once more
extended the deadline for the start of activities of the State Pension Fund, for an additional 30
It is relevant to analyze what will happen with the investment of the pension funds, when the
functions of the AFPs are finally transferred to the State Pension Fund. Will the State Pension Fund
perform the same functions that are currently fulfilled by the AFPs? If the regulations that govern
the State Pension Fund are different from the regulations that currently govern the AFPs, the
pension funds could play a less important role in the market of bonds issued in Bolivia.
Article 40 b) of Law 1732 (Former Pensions Law, applicable to AFPs) establishes the following, with
respect to the investment limits of the AFPs: "No more than 40% (forty percent) of the securities
must belong to the same issue or series, in accordance with the Rules." This 40%, however, was
referring to the limits established for each of the two AFPs, and therefore, the effective limit of
joint investment of the AFPs in bond issues, was of 80%.
However, art. 140 of Law 065 (current Pensions Law) establishes the following limit for the
investment of resources of the funds managed by the State Pension Fund: "No more than sixty
percent (60%) of the amount of the same issue or Securities o Financial Instruments by Fund."
Therefore, in the future, the State Pension Fund will have investment limits, which are different
from the current ones, decreasing, in our opinion, its dominance in the Bolivian capital markets.
The differences between AFPs and the State Pension Fund, in their role as institutional investors,
do not end there. Administrative Resolution APS/DJ/UI/ No. 464/2017, of April 19, 2017, approves
a new investment regulation for the funds of the State Pension Fund. A detailed analysis of this
norm reflects some other very relevant differences. For example, article 5 e) establishes that: "The
sum of investments made in an Issuance of Securities or in Issuances included in a single Securities
Issuance Program (with a risk valuation) exceeding one percent (1) %) of the value of the Fund,
may be made only if the issuance or the program has two continuous and uninterrupted risk
ratings [...] ". Therefore, the need to have two risk ratings is subject to the value of the specific
fund, which is markedly different from the current regulation, in which the determining factor for
requiring two risk ratings is subject to the amount of the specific issuance (with a threshold of 25
million dollars to activate this additional requirement).

Companies that, in the future, wish to issue bonds, should take these and other aspects into

Enrique Barrios and José Bernal
Guevara & Gutiérrez S.C.

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