The impact on public debt reached USD 18.33 billion (40.7% of GDP, USD 45 billion), with external debt amounting to USD 12.47 billion (27.7% of GDP). A pension fund system could mobilize domestic savings, reducing reliance on external borrowing. Paraguay’s formal workforce comprises 1.18 million workers, with an average monthly wage of USD 413. A 10% contribution (USD 41.3 per worker) would generate USD 584.9 million annually (1.18 million × USD 41.3 × 12).

How AFPs Work: AFPs are private financial institutions that manage pension funds under an individual capitalization scheme. Unlike the pay-as-you-go system of the Social Security Institute (IPS), where contributions from active workers finance current pensions, AFPs operate as follows: Each worker contributes a percentage of their salary (typically 10–15%, as in Chile; 10% or 13% in Peru) to an individual account.

Paraguay faces a structural challenge that limits its economic and social development: high levels of informal employment. According to data from the National Institute of Statistics (INE), nearly 70% of Paraguayan workers are employed in the informal economy, without access to social security, formal contracts, or employee benefits. This situation not only perpetuates precariousness but also undermines the sustainability of the pension system, a key pillar for ensuring citizens’ economic stability in old age.