Your AFAP account: what it is, how much is in it, and what you can do with that money

Each month, part of what you contribute for your pension doesn't go into a common pot: it goes to an individual savings account in your name. It's literally your money building up. And like any savings, there are decisions you can make to grow it. This is the complete guide.

What the AFAP account is

Uruguay's pension system is mixed: part is run by the BPS (solidarity between generations) and part goes to your individual account at an AFAP (a pension savings fund manager).

Per the BPS:

«Las AFAP son empresas que administran los aportes de los afiliados. Cada afiliado tiene una cuenta a su nombre que se compone de sus aportes y de la rentabilidad que generan.»

In English: AFAPs are companies that manage affiliates' contributions. Each affiliate has an account in their name made up of their contributions and the returns they generate.

How much goes into your account

The pension contribution withheld from you is 15% of your nominal salary (or of the notional salary if you're self-employed):

On the contribution:

«El aporte personal jubilatorio equivale al 15 % del salario nominal de un trabajador»

In English: The personal pension contribution equals 15% of a worker's nominal salary

And how it's split:

«Si la remuneración se encuentra por debajo del primer nivel del SPC, el 10 % lo administra BPS o el organismo previsional que corresponda, y el 5 % se distribuye a la AFAP.»

In English: If the remuneration is below the first SPC level, 10% is managed by the BPS or the corresponding pension body, and 5% goes to the AFAP.

In other words: if you earn below the first level, 10% supports today's pensions (BPS) and 5% stays in your account. For higher income brackets, a larger portion goes straight to your individual savings. The level amounts are updated, so it's worth checking the current values.

The four AFAPs: you choose (and can switch)

Uruguay has four AFAPs: República, Sura, Itaú and Integración. You aren't tied to one forever: you can choose and switch manager. They don't all charge the same or perform alike, so the choice matters for your future pension.

How your money is invested: the sub-funds

Your savings don't sit still: the AFAP invests them. There are sub-funds (Growth, Accumulation and Retirement) with different risk levels. The idea is that when young your money is in funds with more growth potential and, as you near retirement, it shifts to more conservative funds to protect it.

Fees and returns: look at this

Here's what many people ignore: the AFAP charges a commission to manage your account, and that reduces what you keep. Two things to compare before choosing: the commission each AFAP charges and its net return (what it yields after fees). The Central Bank publishes this data for all AFAPs so you can compare:

You can contribute extra (voluntary saving)

Beyond the mandatory contribution, you can make voluntary deposits into your AFAP account to improve your pension, by bank debit or through your employer. It's a form of long-term saving within the pension system.

What happens to that money at retirement

When you retire, the balance accumulated in your account funds a monthly benefit: generally a life annuity contracted with an insurance company (the BSE), which pays you every month for life. In certain cases (e.g. small balances or no causal) there are other options, such as withdrawing the accumulated capital. The detail of each situation is at the BPS:

Is it inheritable?

An important nuance. If your balance funds a life annuity, that capital passes to the insurer and isn't inheritable as such — but the insurer must pay a survivor's pension to your survivors (spouse, children) if you die. In other modes, such as programmed withdrawal, if there are no pension beneficiaries the balance can reach your heirs. So it's worth being clear about your beneficiaries.

What you can do today

• Check your statement: how much you've accumulated and which AFAP you're in.
• Compare fees and net returns at the BCU before deciding.
• Consider switching AFAP if yours charges more or yields less.
• Consider voluntary saving if you want a higher pension.
• Review your work history at the BPS to see your contributions.

At a glance

In short: the AFAP account is your personal pension savings — your money, in your name, which you can look after by choosing the manager well, watching fees and returns, and even contributing extra. It's no small detail: it directly impacts your pension. Check your account, compare at the BCU and, when in doubt, ask your AFAP or an adviser.