Peru's government on Tuesday said that it had started to allow private pension fund holders to move their funds back to the state-owned pension system.

The nation's office of Superintendent of Banking, Insurance and Private Pensions said that offices would be open from Tuesday to help those wanting to make the transfers.

"I think that of the hundreds of thousands of retirees, at least 200,000 will be able to change pensions over the course of time," President Alan Garcia told reporters Tuesday.

In March, Peru's Congress voted to approve a bill that would allow some persons enrolled in private pension funds to return to the state-run pension plan.

The measure was aimed at allowing those who were in the state-run system until the end of 1995, but who then passed to the private pension fund system, to return.

Proposals to allow the shift from private pensions to the public system gained ground in recent years but were opposed by the administration of former President Alejandro Toledo.

Toledo's cabinet had argued that the cost of allowing the transfers could rise to some $2.7 billion to cover the cost of the pensions guaranteed by the state, if an estimated 219,000 pension holders moved.

But Garcia campaigned before the 2006 election with promises to allow the pension holders to change plans.

Those in favor of the free affiliation proposal had argued that it would allow for early retirement with a minimum pension, something critics say hasn't been an option in the private pension fund system.

Peru's private pension funds, or AFPs, began operating in 1993.

These are: AFP Integra, mainly owned by the ING Group (ING); AFP Horizonte, owned mainly by Holding Continental and Spain's Banco Bilbao Vizcaya Argentaria; (BBV) AFP ProFuturo, whose biggest shareholder is Citibank Overseas Investment Corp (C) and AFP Prima, owned by Credicorp Ltd. (BAP).

-Robert Kozak, Dow Jones Newswires; 511-221-7050; peru@dowjones.com

More Information on World Pension Issues